Multiple choice

What will be the difference between simple interest and compound interest at 10% per annum on a sum of Rs. 500 after 3 years?

  1. Rs. 16.50

  2. Rs. 15.50

  3. Rs. 14.50

  4. Rs. 16

  5. Rs. 17.50
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Simple interest for 3 years at 10% is 30% of 500, which is 150. Compound interest is 500 * (1.1^3 - 1) = 500 * (1.331 - 1) = 500 * 0.331 = 165.5. The difference is 165.5 - 150 = 15.5.

AI explanation

Using the formula for the difference between compound interest and simple interest for 3 years, which is P times R squared times (3 plus R) divided by 100 cubed, we substitute the given values. The difference equals 500 times 10 squared times (3 plus 10) divided by 100 cubed, which is 500 times 100 times 13 divided by 1000000. Calculating this gives 650000 divided by 1000000, which results in Rs. 15.50.

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