Question

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 1

(b) R < r

If the total amount received after 2 yr 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