Multiple choice

The difference between simple interest and compound interest is Rs. 256 and the principal amount has been invested for 2 years at the rate of 8%. What could be the principal amount?

  1. Rs. 4,000

  2. Rs. 40,000

  3. Rs. 44,000

  4. Rs. 45,000

  5. Rs. 45,500
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B Correct answer
Explanation

Difference between CI and SI for 2 years = P * (r/100)^2. 256 = P * (8/100)^2. 256 = P * (64/10000). P = 256 * 10000 / 64 = 4 * 10000 = 40,000.

AI explanation

For a period of 2 years, the difference between compound interest and simple interest is calculated using the formula principal multiplied by the rate squared, divided by 10000. Plugging in the given values, 256 equals the principal multiplied by 8 squared, divided by 10000. This simplifies to 256 equals the principal multiplied by 64 divided by 10000, so the principal equals 2560000 divided by 64, resulting in Rs. 40,000.

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