Multiple choice

On a certain sum of money, after 2 years on the same rate simple interest and compound interest obtained are Rs 1200 and Rs 1500 respectively. What is the sum of money invested?

  1. 1500

  2. 1800

  3. 1200

  4. 1600

  5. 1400
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For simple interest: SI = P×R×2/100 = 1200, so PR/100 = 600. For compound interest after 2 years: CI = P[(1+R/100)²−1] = 1500. The difference CI−SI = P(R/100)² = 300. Substituting PR = 60000 gives R = 50%, then P = 1200. The key insight is that the difference between CI and SI for 2 years equals P×R²/10000.

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