Multiple choice

Priya wants to find the simple interest for a period of 2 years such that it has the same rate of interest as compound interest amounts to Rs. 204 compounded for two years at the rate of interest of 4%. What will be the simple interest for two years?

  1. Rs. 200

  2. Rs. 150

  3. Rs. 195

  4. Rs. 170

  5. Rs. 180
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A Correct answer
Explanation

Compound interest for 2 years at 4% on P: P(1.04)^2 - P = 204. P(1.0816 - 1) = 204. P(0.0816) = 204. P = 2500. Simple interest = P * R * T / 100 = 2500 * 4 * 2 / 100 = 200.

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