Multiple choice

What is the difference between the compound interest and simple interest on Rs.2500 for 2 years at 4% p.a. ?

  1. Rs.0

  2. Rs.2

  3. Rs.3

  4. Rs.4
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

For 2 years, the difference between compound interest and simple interest is P * (R/100)^2. Difference = 2500 * (4/100)^2 = 2500 * (0.04)^2 = 2500 * 0.0016 = 4.

AI explanation

Using the standard formula for the difference between compound interest and simple interest for two years, which is Principal multiplied by the square of the rate divided by 10000, we calculate the difference as 2500 x 4 x 4 / 10000. Multiplying the values gives 40000 / 10000, which equals Rs. 4.

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