Multiple choice

The difference between the interests earned when Rs. P is invested for four years in a scheme offering 9% p.a. Simple interest and when the same sum (Rs P) is invested for two years in another scheme offering 12% p.a. Compound interest, is Rs 528. What is the value of P?

  1. 4000

  2. 5000

  3. 4500

  4. 3500

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Simple Interest for 4 years at 9% = P × 9 × 4 / 100 = 0.36P. Compound Interest for 2 years at 12% = P(1 + 12/100)^2 - P = P(1.12)^2 - P = 0.2544P. The difference is 0.36P - 0.2544P = 0.1056P = 528. Solving: P = 528/0.1056 = 5000.

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