Multiple choice

The simple interest on a certain sum for 4 yrs at a rate of 12.5% per annum is Rs 4000. What will be the compound interest on the same sum at a rate of 4% per annum after two years?

  1. Rs 762.8

  2. Rs 562.8

  3. Rs 652.8

  4. Rs 842.4
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Simple interest = P * R * T / 100. 4000 = P * 12.5 * 4 / 100 => 4000 = P * 0.5 => P = 8000. Compound interest for 2 years at 4% = 8000 * ((1 + 0.04)^2 - 1) = 8000 * (1.0816 - 1) = 8000 * 0.0816 = 652.8.

AI explanation

Using the simple interest formula to find the principal, we have P multiplied by 12.5 multiplied by 4 divided by 100 equals 4000, which gives a principal of 8000. Applying the compound interest formula for two years, the interest is 8000 multiplied by (1.04 squared minus 1). This equals 8000 multiplied by 0.0816, which gives a compound interest of Rs 652.8.

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