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Simple Vs Compound Interest
The difference between compound interest and simple interest on an amount of Rs. 15,000 for 2 years is Rs. 96. What is the rate of interest per annum?
Explanation and memory cue
The difference between compound interest (CI) and simple interest (SI) on a principal P for 2 years at rate R% per annum compounded annually is given by the formula: Difference = P × (R/100)^2. Given the difference is Rs. 96 and principal is Rs. 15,000, we have 15000 × (R/100)^2 = 96, which simplifies to R^2 = 96 × 10000 / 15000 = 64, so R = 8%. Therefore, the rate of interest per annum is 8%. The correct option is A.