Multiple choice

Compound interest (compunded annually) on a certain sum of money for 2 years at 4% per annum is Rs. 102. The simple interest on the same sum for the same rate and for the same period will be-

  1. Rs. 90

  2. Rs. 100

  3. Rs. 101

  4. Rs. 98
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

CI for 2 years at 4%: Amount = P(1.04)^2 = P × 1.0816. CI = 0.0816P = 102, so P = 102/0.0816 = 1250. SI = P × R × T / 100 = 1250 × 4 × 2 / 100 = 100. Alternative formula: CI - SI = 102 - 100 = 2 = P(R/100)^2 = P(0.04)^2 = 0.0016P, verifying P = 1250.

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