Multiple choice

Alex allocated two identical investments of Rs. 5,000 each into two distinct savings accounts for a duration of 2 years. Account X accrues simple interest at an annual rate of 8%, while Account Y compounds interest yearly at an annual rate of 10%. What is the approximate difference between the final values of these investments upon maturation?

  1. Rs. 470

  2. Rs. 480

  3. Rs. 390

  4. Rs. 250

  5. Rs. 210
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Account X (simple interest) yields 5000 * 0.08 * 2 = 800, total 5800. Account Y (compound interest) yields 5000 * (1.10)^2 = 6050. The difference is 6050 - 5800 = 250.

AI explanation

Account X accrues simple interest, so its final value is 5000 plus (5000 multiplied by 0.08 multiplied by 2), which equals Rs. 5,800. Account Y compounds yearly, so its final value is 5000 multiplied by 1.10 squared, which equals Rs. 6,050. The difference between the final values is 6050 minus 5800, which is Rs. 250.

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