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?
- A0.25%Correct
- B0.5%
- C1%
- D2.5%
Explanation
To solve this, we use the simple interest formula: Interest equals Principal times Rate times Time divided by 100.
The difference in simple interest is given as 2.50. Let the two rates be R1 and R2.
According to the formula: (500 * R1 * 2 / 100) - (500 * R2 * 2 / 100) = 2.50
This simplifies to: 10 * R1 - 10 * R2 = 2.50 10 * (R1 - R2) = 2.50
To find the difference between the rates (R1 - R2), we divide 2.50 by 10: R1 - R2 = 0.25
Therefore, the difference between their rates is 0.25 percent. Option A is correct.
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