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Asked in PPSC, FPSC and other one-paper exams (compiled from unofficial resources).

Financial MathematicsSimple and Compound Interest

If the interest on Rs. 800 in 2 years is more than the interest on Rs. 400 by Rs. 40 in 2 years, find the rate of simple interest.

A.$5\%$Correct answer
B.$10\%$
C.$8\%$
D.$4\%$

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Quick fact: The rate of simple interest is $5\%$.

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