Multiple choice

The simple interest at a rate of 10% per annum on a deposit for 2 years is Rs. 4000. If the interest is compounded on an annual basis, then how much more will the interest amount be?

  1. Rs. 200

  2. Rs. 240

  3. Rs. 220

  4. Rs. 190
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Simple interest = 4000 for 2 years at 10% means principal = 20000. Compound interest for 2 years = 20000 * (1.1^2 - 1) = 20000 * 0.21 = 4200. The difference is 4200 - 4000 = 200.

AI explanation

Using the simple interest formula, the principal equals 4000 multiplied by 100 divided by the product of 10 and 2, which is 20000. The compound interest on this principal is 20000 multiplied by the quantity 1.1 squared minus 1. This results in 20000 multiplied by 0.21, giving a compound interest of 4200. The difference between the compound interest and the simple interest is 4200 minus 4000, which is 200.

Keep practicing — related questions