Multiple choice

What is the difference between the simple interest and compound interest accrued on Rs. $12,000$ at $16$% p.a. for two years?

  1. $Rs. 720$
  2. $Rs. 307.20$
  3. $Rs. 476.80$
  4. $Rs. 680$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Simple interest = (12000 * 16 * 2) / 100 = 3840. Compound interest = 12000 * ((1 + 0.16)^2 - 1) = 12000 * (1.3456 - 1) = 12000 * 0.3456 = 4147.20. Difference = 4147.20 - 3840 = 307.20.

AI explanation

Using the formula for the difference between compound interest and simple interest for two years, we have Difference = P * (R / 100)^2. Substituting the given values, we get 12000 * (16 / 100)^2 = 12000 * 0.0256 = 307.20. The difference between the compound interest and simple interest is Rs. 307.20.

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