Paper 1 · Mathematical Reasoning and Aptitude
At the same rate of interest, in 2 years the simple interest is Rs 40 and the compound interest is Rs 41. What is the rate of interest?
A4%
B5% ✓ Correct
C8%
DNone of the above
Correct answer: (B) 5% — The rate of interest is 5%, so that is the answer.
Explanation
★The rate of interest is 5%, so that is the answer.
★The simple interest for 2 years is 40, so the interest for one year is 20.
★The extra 1 rupee in compound interest is the interest earned on the first year's interest of 20.
★So 1 is the interest on 20 for one year.
★The rate is 1 over 20, which is 5%.
★So the rate of interest is 5%.
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