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    Question

    Amit invested an amount in Fund

    'P', which provides compound interest at a rate of 'r'% per annum, compounded annually. He invested the same amount in Fund 'Q', which provides simple interest at a rate of {(2r + 1)/2}% per annum. After 2 years, the interest earned from both funds is equal. Determine the value of 'r'.
    A 10 Correct Answer Incorrect Answer
    B 12 Correct Answer Incorrect Answer
    C 6 Correct Answer Incorrect Answer
    D 18 Correct Answer Incorrect Answer

    Solution

    ATQ,

    Let sum invested = Rs. ‘P’ ATQ, P × {1 + (r/100)}2 – P = {P × (2r + 1) × 2}/(2 × 100) Or, 1 + (r2 /1002 ) + (r/50) – 1 = (r/50) + (1/100) Or, (r2 /1002 ) + (r/50) = (r/50) + (1/100) Or, (r2 /1002 ) = (1/100) Or, r2 = 100 So, r = 10 {Since, rate cannot be negative so we can drop 'r' = -10} So, the value of ‘r’ = 10

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