Multiple choice

What is the difference between the simple interest and the compound interest on Rs. 1000 at 5% p.a. for 3 years?

  1. Rs. 7.63

  2. Rs. 8.63

  3. Rs. 9.03

  4. Rs. 9.23
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Simple interest = 1000 * 0.05 * 3 = 150. Compound interest = 1000 * (1.05^3 - 1) = 1000 * (1.157625 - 1) = 157.625. Difference = 157.625 - 150 = 7.625, which rounds to 7.63.

AI explanation

Using the formula for the difference between compound interest and simple interest for three years, which is Principal multiplied by Rate squared multiplied by (300 plus Rate) divided by 100 cubed, we substitute the given values. The calculation is 1000 multiplied by 25 multiplied by 305 divided by 10,00,000, resulting in 762.5 divided by 100. This gives a difference of Rs. 7.63.

Keep practicing — related questions