Multiple choice

The difference between compound interest and simple interest on a certain sum for 2 years at 5% per annum is Rs. 100. Find the sum.

  1. Rs. 400000

  2. Rs. 41000

  3. Rs. 40000

  4. Rs. 4000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Difference = P * (R/100)^2 for 2 years. 100 = P * (5/100)^2 = P * (1/20)^2 = P / 400. P = 100 * 400 = 40000.

AI explanation

The formula for the difference between compound interest and simple interest for two years is Principal multiplied by rate squared divided by 10000. Setting this equal to the given difference, we have Principal multiplied by 5 squared divided by 10000 equals 100. Simplifying this gives Principal multiplied by 25 divided by 10000 equals 100. Multiplying both sides by 10000 and dividing by 25 yields a principal sum of 40000.

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