Multiple choice

Find the difference between simple interest and compound interest on the sum of Rs. 2000 for 3 years at 5%.

  1. Rs. 20.75

  2. Rs. 17.50

  3. Rs. 15.25

  4. Rs 14.80

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

SI = (2000 * 5 * 3) / 100 = 300. CI = 2000 * (1 + 0.05)^3 - 2000 = 2000 * 1.157625 - 2000 = 2315.25 - 2000 = 315.25. Difference = 315.25 - 300 = 15.25.

AI explanation

Using the Simple Interest formula, the interest for three years is 2000 times 5 times 3 divided by 100, which equals Rs. 300. Using the Compound Interest formula, the amount is 2000 times (1 plus 0.05) cubed, resulting in Rs. 2315.25. The compound interest is 2315.25 minus 2000, leaving Rs. 315.25, so the difference between the compound interest and the simple interest is 315.25 minus 300, which is Rs. 15.25.

Keep practicing — related questions