AFCAT Model Paper 8

Given:
Time(t) = 2 years
n = 1 [Compounded annually]
C.I. – S.I. = Rs. 25.35
P(Principal) = Rs. 1500
Formula used:
Compound Interest (Net Amount )=p(1+

r

n

)nt=p(1+r)2=p(1+2r+r2)
Simple Interest(Net Amount) = p(rt) + p = p(1 + 2r)
Calculation:
Difference = C.I. − S.I. =p(1+2r+r2−1−2r)=p(r2)=25.35
⇒ 1500r2=25.35
⇒ r2=0.0169
⇒ r = √0.0169= 0.13 = 13%.
∴ The rate of interest is 13%.