Multiple choice

The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Rs. 8. The sum is ______.

  1. Rs. 10,000

  2. Rs. 20,000

  3. Rs. 5,000

  4. Rs. 15,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For 2 years, the difference between CI and SI is P * (R/100)^2. 8 = P * (4/100)^2. 8 = P * (1/25)^2. 8 = P / 625. P = 8 * 625 = 5000.

AI explanation

Using the formula for the difference between compound interest and simple interest for two years, Difference = Principal multiplied by Rate squared divided by 10000. Substituting the given values, we have 8 = Principal multiplied by 4 squared divided by 10000, which simplifies to 8 = Principal multiplied by 0.0016. Solving for the principal gives 8 divided by 0.0016, which equals Rs. 5000.

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