Simple one on Simple and Compound interest

B it is.

Since the compound interest is still compounded annually (once a year), after the first year there's no difference between the simple and compound interest - each will only accrue interest once.

It's after the second year that the difference manifests.

Simple interest is always taken from the Principal. It's the same fixed amount every year: if the simple account does $200 in two years, this means that he does $100 a year, flat.

Compound interest will accrue the same $100 interest on the principal, but will also accrue extra interest on the interest accrued in the first year. That's the source of the $20 difference between the two accounts: the $20 extra is the interest taken from the extra $100 the compound account accumulated in the first year.

A $20 interest on a $100 "principal" amounts to 20% interest - hence B.

let the simple interest for 2 year be
pr*2/100 = 200
pr = 10^4.

simple interest for 1 year = 100.
compound interest for 2 years = 220
thus simple interest for 2nd year = 220-100=120.
calculating for the 2nd year

(p+100)r*1/100 = 120
thus
pr+100r = 120*100 giving r= 20%

B it is.