Mathematics for FinanceMTP Nov 20Question 1308 of 512
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The difference between simple interest and compound interest on a sum of 6,00,000\displaystyle 6,00,000 for two years is 6000\displaystyle 6000. What is the annual rate of interest?

Options

A8%\displaystyle 8\%
B10%\displaystyle 10\%
C6%\displaystyle 6\%
D12%\displaystyle 12\%
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Correct Answer

✅ Option b — 10%\displaystyle 10\%

All Options:

  • A8%\displaystyle 8\%
  • B10%\displaystyle 10\%
  • C6%\displaystyle 6\%
  • D12%\displaystyle 12\%

Detailed Solution & Explanation

**Derivation of Rate of Interest** Given: - Principal (P\displaystyle P) = Rs. 6,00,000\displaystyle \text{Rs. }6,00,000 - Time (t\displaystyle t) = 2\displaystyle 2 years - Difference between Compound Interest and Simple Interest (CI−SI\displaystyle CI - SI) = Rs. 6,000\displaystyle \text{Rs. }6,000 **Step 1: Use the difference formula for 2 years** Difference=P(r100)2\text{Difference} = P \left(\frac{r}{100}\right)^2 6000=600000(r100)26000 = 600000 \left(\frac{r}{100}\right)^2 6000=60r26000 = 60 r^2 r2=600060=100r^2 = \frac{6000}{60} = 100 r=100=10% per annumr = \sqrt{100} = 10\% \text{ per annum} Hence, **Option B** is the correct answer.

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