Multiple choice

A sum of ₹8000 is invested at 12% per annum for 2 years. Find the difference between the Compound Interest (compounded annually) and the Simple Interest on the same sum and rate.( Approximate )

  1. 46

  2. 115

  3. 79

  4. 103

  5. 280
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B Correct answer
Explanation

SI = (8000 * 12 * 2) / 100 = 1920. CI = 8000 * (1 + 0.12)^2 - 8000 = 8000 * 1.2544 - 8000 = 10035.2 - 8000 = 2035.2. Difference = 2035.2 - 1920 = 115.2. Approximately 115.

AI explanation

For a two-year period, the difference between compound interest and simple interest is given by the formula principal multiplied by the square of the rate divided by 10000. Substituting the values gives 8000 multiplied by 12 squared divided by 10000, resulting in 8000 multiplied by 144 divided by 10000, which equals 115.2. The approximate difference is Rs. 115.

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