Question:
Suppose a certain sum doubles in 2 yr at r% rate of simple interest per annum and R°/o rate of interest per annum compounded annually.
Then,
(a) r < R
(b) R
(c)R = r
(d) Cannot be determined
Solution:
(b) 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
Hence, option (b) is correct.