gs1medium
The difference between the simple interest received from two banks on Rs. 500 for two years is Rs. 2.50. What is the difference between their rates ?
- A.0.25%
- B.0.5%
- C.1%
- D.2.5%
▶ Answer & Explanation
Correct answer: A. 0.25%
Simple Interest (SI) is calculated as (Principal \u00d7 Rate \u00d7 Time) / 100. Let the principal be P = Rs. 500 and time be T = 2 years. Let the rates of interest for the two banks be R1 and R2. The difference in SI is Rs. 2.50. So, (P \u00d7 R1 \u00d7 T) / 100 - (P \u00d7 R2 \u00d7 T) / 100 = 2.50. This simplifies to (P \u00d7 T / 100) \u00d7 (R1 - R2) = 2.50. Substituting the values, (500 \u00d7 2 / 100) \u00d7 (R1 - R2) = 2.50, which means 10 \u00d7 (R1 - R2) = 2.50. Therefore, the difference in rates (R1 - R2) is 2.50 / 10 = 0.25%.
Source: UPSC gs1 2010