Multiple choice

If the compound interest on a sum for 2 years at 12.5% is Rs 510, the simple interest on the same sum at the same rate for the same period of time is-

  1. 400

  2. 450

  3. 460

  4. 480
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Let P be the principal. Compound interest formula for 2 years: A = P(1 + 0.125)² = P(1.125)² = P × 1.265625. CI = P(1.265625 - 1) = 0.265625P = 510, so P = 1920. Simple interest for 2 years at 12.5%: SI = 1920 × 0.125 × 2 = 480.

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