Multiple choice

If the compound interest on a certain sum for two years at 12(1/2) % p.a. is 4080, the simple interest on the same sum at the same rate of interest for the same period of time is

  1. Rs.3200

  2. Rs.3600

  3. Rs.3680

  4. Rs.3840

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Using the compound interest formula: CI = P[(1 + r/100)^n - 1]. At 12.5% for 2 years: 4080 = P[(1.125)^2 - 1] = P[1.265625 - 1] = P(0.265625). Therefore P = 4080/0.265625 = Rs. 15,360. Simple interest = P × R × T / 100 = 15360 × 12.5 × 2 / 100 = 15360 × 0.25 = Rs. 3840. Option D matches this calculation.