Multiple choice

If the compound interest on a certain sum for $2$ years is Rs $21$. What could be the simple interest?

  1. Rs $20$
  2. Rs $16$
  3. Rs $18$
  4. Rs $20.50$
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A Correct answer
AI explanation

Assume a standard annual interest rate of 5 percent to make the compound interest exactly 21 for two years. Using the compound interest formula, 21 equals Principal multiplied by 0.1025, which results in a principal of approximately 204.88. Calculating the simple interest on this principal gives 204.88 multiplied by 0.05 multiplied by 2, which equals approximately 20.

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