Multiple choice

The difference between compound interest and simple interest on an amount at 10% p.a. for 2 years is Rs. 40. Find the amount.

  1. 4000

  2. 4200

  3. 4100

  4. 4300

  5. None of these
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A Correct answer
Explanation

For 2 years, the difference between CI and SI is P * (r/100)^2. 40 = P * (10/100)^2 = P * 0.01. P = 40 / 0.01 = 4000.

AI explanation

For a period of two years, the difference between compound interest and simple interest can be calculated using the formula Principal multiplied by Rate squared divided by 10000. We substitute the given difference and rate into the formula, resulting in 40 equals Principal multiplied by 10 squared divided by 10000. Solving this equation gives Principal equals 40 multiplied by 10000 divided by 100, which means the principal is 4000.

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