Multiple choice

The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 16% per annum is Rs. 320. What is the value of the given sum (in rupees)?

  1. 25,000

  2. 50,000

  3. 37,500

  4. 12,500
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The difference between compound interest and simple interest for 2 years is given by P(r/100)^2. Here, 320 = P(16/100)^2 = P(0.16)^2 = P(0.0256). Solving for P gives 320 / 0.0256 = 12,500.

AI explanation

For 2 years, the difference between compound interest and simple interest is given by the formula Difference = P * (R / 100)^2. Substituting the given values gives 320 = P * (16 / 100)^2. This simplifies to 320 = P * (0.0256), so P = 320 / 0.0256. Dividing 320 by 0.0256 gives 12,500. The sum is Rs. 12,500.

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