Multiple choice

The compound interest on a certain sum of money at 21% for 2 years is Rs. 6,961.5. Its simple interest (in Rs.) at the same rate and for the same period is:

  1. Rs. 6,300

  2. Rs. 6,500

  3. Rs. 6,000

  4. Rs. 6,750
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A Correct answer
Explanation

Use the compound interest formula to find the principal: CI = P[(1 + r/100)^n - 1]. 6961.5 = P[(1.21)^2 - 1] = P[1.4641 - 1] = 0.4641P, so P = 15000. Simple interest = P × R × T / 100 = 15000 × 21 × 2 / 100 = 6300.

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