Multiple choice

If the simple interest on a sum of money for 2 years at 5% per annum tin Rs. 50, what is the compound interest on the same sum at the same rate and for the same time?

  1. Rs.51.25

  2. Rs.52

  3. Rs.54.25

  4. Rs.60
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

From simple interest, 50 = P x 5 x 2 / 100, so the principal is Rs. 500. Compound interest for two years is 500 x 1.05^2 - 500 = Rs. 51.25.

AI explanation

Using the simple interest formula, the principal is calculated as (50 times 100) divided by (5 times 2), which equals Rs. 500. The compound interest on this sum for 2 years at 5% is found using the formula Amount = Principal times (1 + Rate divided by 100) raised to the power of time, giving 500 times 1.05 squared, which equals Rs. 551.25. The compound interest is the final amount minus the principal, so 551.25 minus 500 equals Rs. 51.25.

Keep practicing — related questions