Multiple choice

If the difference between compound interest and simple interest on a certain amount at 7% per annum for two years is Rs. 7.35, then find the principal amount.

  1. Rs. 1,500

  2. Rs. 1,480

  3. Rs. 1,200

  4. Rs. 620
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A Correct answer
Explanation

Difference between CI and SI for 2 years = P * (r/100)^2. 7.35 = P * (7/100)^2 = P * 0.0049. P = 7.35 / 0.0049 = 1500.

AI explanation

The difference between compound interest and simple interest for two years is calculated using the formula P * (R/100)^2. Setting this equal to the given difference gives P * (7/100)^2 = 7.35. Solving this equation gives P * 0.0049 = 7.35, so P equals Rs. 1,500.

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