Multiple choice

On what sum of money will the difference between simple interest and compound interest for 2 years at 5% per annum be equal to Rs. 25?

  1. Rs. 18,000

  2. Rs. 12,000

  3. Rs. 15,000

  4. Rs. 10,000

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

Difference for 2 years = P * (r/100)^2. 25 = P * (5/100)^2 = P * (1/20)^2 = P / 400. P = 25 * 400 = 10,000.

AI explanation

Using the formula for the difference between compound interest and simple interest for two years, the difference equals the principal multiplied by the square of the rate divided by 10000. Substituting the known values, 25 equals the principal multiplied by 25 divided by 10000. Solving for the principal gives 25 multiplied by 400, which is 10000.

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