Multiple choice

The difference between compound and simple interests on Rs. 10,000 for 3 years at 5% p.a. is

  1. Rs. 76.50

  2. Rs. 76

  3. Rs. 76.25

  4. Rs. 76.75
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The difference between compound interest and simple interest for 2 years is P(r/100)^2. For 3 years, the difference is P(r/100)^2 * (3 + r/100). Plugging in P=10000 and r=5, we get 10000 * (0.05)^2 * (3.05) = 10000 * 0.0025 * 3.05 = 25 * 3.05 = 76.25.

AI explanation

Using the direct formula for the difference between compound interest and simple interest for three years, we calculate Difference = P * (R/100)^2 * (3 + R/100). Substituting the given values, we get Difference = 10000 * (5/100)^2 * (3 + 5/100) = 10000 * 1/400 * 3.05 = 25 * 3.05 = 76.25. Therefore, the difference is Rs. 76.25.

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