Multiple choice

The difference between compound interest and simple interest on a sum of money at the rate of 10% p.a. for 2 years is Rs. 50. Find the principal amount.

  1. Rs. 5,500

  2. Rs. 4,000

  3. Rs. 5,000

  4. Rs. 4,500

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

For 2 years, the difference between compound interest and simple interest is given by P * (r/100)^2. Here, 50 = P * (10/100)^2 = P * (0.1)^2 = P * 0.01. Thus, P = 50 / 0.01 = 5000.

AI explanation

For a period of two years, the difference between compound interest and simple interest is calculated using the formula: Difference equals Principal multiplied by Rate divided by 100, squared. Substituting the given values, 50 equals Principal multiplied by 10 divided by 100, squared. This simplifies to 50 equals Principal multiplied by 0.01. Solving for the Principal gives 50 divided by 0.01, which results in Rs. 5,000.

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