Multiple choice

A man invested Rs. 16,000 at a simple interest rate of 8% per annum for 2 years. Had he invested the sum at a compound interest rate of 8% per annum for the same period, how much more would be have earned?

  1. Rs. 102.40

  2. Rs. 201.85

  3. Rs. 100

  4. Rs. 95.81
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A Correct answer
Explanation

Simple interest is Rs. 2,560, while compound interest for 2 years is Rs. 2,662.40. The extra amount earned is Rs. 2,662.40 - Rs. 2,560 = Rs. 102.40.

AI explanation

Using the Simple Interest formula, the interest earned is (16000 x 8 x 2) divided by 100, which equals Rs. 2560. Using the Compound Interest formula, the amount becomes 16000 multiplied by (1 + 0.08) squared, which equals Rs. 18662.40, making the compound interest Rs. 3062.40. The difference between the compound interest and the simple interest is 3062.40 minus 2560, which equals Rs. 102.40.

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