Multiple choice

The difference between the compound interest and simple interest on a certain sum of money for 2 years at 8% per annum is Rs. 128. Find the principal sum.

  1. 24000

  2. 16000

  3. 22000

  4. 20000

  5. 18000
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D Correct answer
Explanation

Difference between CI and SI for 2 years = P * (r/100)^2. 128 = P * (8/100)^2. 128 = P * (64/10000). P = 128 * 10000 / 64 = 20000.

AI explanation

For two years, the difference between compound interest and simple interest is calculated using the formula P times R squared divided by 10000. Substituting the given values, we get P times 8 squared divided by 10000 equals 128. Solving for P gives P times 64 equals 1280000, which results in a principal sum of Rs. 20000.

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