Question

The difference of simple interest from two banks for Rs. 1000 in 2 years is Rs 20. Find the difference in rates of interest.

• A. 2%
• B. 1%
• C. 1.5%
• D. 2.5%

Hint:

In simple interest problems, the difference in interest can be used to find difference in rates easily.
Keep the principal and time same to simplify calculations.

Answer 1

The Correct Option is B

Given:
Principal (P) = Rs 1000
Time (T) = 2 years
Difference in simple interest (SI) = Rs 20
Step 1: Use formula for simple interest
Simple Interest, $SI = \frac{P \times R \times T}{100}$, where $R$ is rate of interest.
Let rates of the two banks be $R_1$ and $R_2$.
Difference in SI:
$\frac{1000 \times R_1 \times 2}{100} - \frac{1000 \times R_2 \times 2}{100} = 20$
Step 2: Simplify equation
$20(R_1 - R_2) = 20$
$R_1 - R_2 = 1$
Step 3: Conclusion
The difference in rates of interest is 1\%.