Multiple choice

On what sum of money will the difference between simple interest and compound interest for 2 years at 5% pa be equal to Rs. 63?

  1. Rs. 25,200

  2. Rs. 24,800

  3. Rs. 25,500

  4. Rs. 24,600

  5. Rs. 25,600
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A Correct answer
Explanation

The difference between simple interest and compound interest for 2 years is given by the formula D = P * (r/100)^2. Plugging in D = 63 and r = 5, we get 63 = P * (5/100)^2, which is 63 = P * (1/20)^2 = P / 400. Thus, P = 63 * 400 = 25200.

AI explanation

Using the formula for the difference between compound interest and simple interest for 2 years, Difference = P * (R/100)^2. Substituting the given values, 63 = P * (5/100)^2, which simplifies to 63 = P * 0.0025. Solving for the principal gives P = 63 / 0.0025, which results in Rs. 25,200.

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