Multiple choice

A person deposited a sum of Rs. 6000 in a bank at 5% per annum simple interest. Another person deposited Rs. 5000 at 8% per annum compound interest. After two years the difference of their interest will be -

  1. Rs .230

  2. Rs .232

  3. Rs .832

  4. Rs .600
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Simple interest on 6000 at 5% for 2 years is 6000 * 0.05 * 2 = 600. Compound interest on 5000 at 8% for 2 years is 5000 * (1.08^2 - 1) = 5000 * 0.1664 = 832. The difference is 832 - 600 = 232.

AI explanation

The simple interest on Rs. 6000 is (6000 * 5 * 2) / 100, which equals Rs. 600. The compound interest on Rs. 5000 is 5000 * [(1 + 8/100)^2 - 1], which equals 5000 * (104/625) for a total of Rs. 832. The difference between their interests is 832 minus 600, which equals Rs. 232.

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