Multiple choice

The difference between simple and compound interest on Rs. 5,000 for three years at the annual interest rate of 10% is

  1. Rs. $300$
  2. Rs. $250$
  3. Rs. $155$
  4. Rs. $150$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

SI = P*R*T/100 = 5000*0.1*3 = 1500. CI = P((1+R)^n - 1) = 5000((1.1)^3 - 1) = 5000(1.331 - 1) = 5000(0.331) = 1655. Difference = 1655 - 1500 = 155.

AI explanation

Using the formula for the difference between compound interest and simple interest for 3 years, Difference = P(R/100)^2(3 + R/100). Substituting the principal of 5,000 and rate of 10%, we get Difference = 5000(10/100)^2(3 + 10/100). This simplifies to 5000(0.01)(3.1), which equals 50 * 3.1 = 155. The difference is Rs. 155.

Keep practicing — related questions