Multiple choice

Alex borrowed a certain amount of money from a moneylender on simple interest for two years at the rate of 10%. Jordan also borrowed the same amount of money for two years at the same rate from the same person, but compounded annually. When they returned their interests after two years, there was a difference of Rs. 631 between their interests. Calculate the amount of money borrowed.

  1. Rs. 43800

  2. Rs. 63100

  3. Rs. 63010

  4. Rs. 48300

  5. Rs. 61300
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Simple Interest (SI) = P * 0.10 * 2 = 0.2P. Compound Interest (CI) = P(1 + 0.10)^2 - P = 1.21P - P = 0.21P. Difference = 0.21P - 0.2P = 0.01P. Given 0.01P = 631, P = 63100.

AI explanation

For two years, the difference between compound interest and simple interest on a sum P at 10% is given by P * (R/100)^2. We calculate this as P * (10/100)^2 = 631, which simplifies to P * 1/100 = 631. Solving for P gives a principal amount of Rs. 63100.

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