Q. 25.0( 4 Votes )

Out of the four options, only one is correct. Write the correct answer.

Suppose a certain sum doubles in 2 years at r% rate of simple interest per annum or at R% rate of interest per annum compounded annually. We have
A. r < R

B. R < r

C. R = r

D. can’t be decided

Answer :

If the total amount received in 2yr is same for both simple interest and compound interest on same principal, then the rate of simple interest is greater than the rate of compound interest.


i.e. R < r.


Hence, option (b) is correct.


In option (a), it says r<R, but it contradicts our proof. Hence, it cannot be correct.


In option (c), it says R = r, but it contradicts our proof. Hence, it cannot be correct.


In option (a), it says cannot be determined, but it contradicts our proof. Hence, it cannot be correct.

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