Multiple choice

The difference between the simple interest and the compound interest on a certain sum of money at 4% per annum in 2 years in Rs. 10. What is the sum?

  1. Rs. 5,000

  2. Rs. 6,000

  3. Rs. 6,250

  4. Rs. 7,500
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For a 2-year period, the difference between compound interest and simple interest is given by the formula D = P * (r/100)^2. Plugging in D = 10 and r = 4, we get 10 = P * (4/100)^2, which is 10 = P * (1/25)^2. Thus, 10 = P/625, so P = 6250.

AI explanation

Using the formula for the difference between compound interest and simple interest for 2 years, Difference = P * (R / 100)^2. Substituting the given values, we get 10 = P * (4 / 100)^2. Simplifying this, we find 10 = P * (0.04)^2, so P = 10 / 0.0016. This results in a principal of Rs. 6,250.

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