Multiple choice

Amit had invested same amount of sums at simple as well as compound interest, compounded annually. The time period of investment for both the sums was 2 years and rate of interest too was the same, 4% per annum. At the end, he found a difference of ₹43 in both the interests received. What were the sums (in ₹) invested?

  1. ₹26,875

  2. ₹27,225

  3. ₹26,125

  4. ₹25,975
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A Correct answer
Explanation

Difference between CI and SI for 2 years is P * (R/100)^2. Given 43 = P * (4/100)^2 = P * (1/25)^2 = P / 625. P = 43 * 625 = 26875.

AI explanation

For two years, the difference between compound interest and simple interest is calculated using the formula Difference = Principal * (Rate / 100)^2. We substitute the given values into the formula: 43 = Principal * (4 / 100)^2. Simplifying the right side gives 43 = Principal * (0.04)^2, which equals Principal * 0.0016. Dividing 43 by 0.0016 gives a principal sum of 26875. The result is Rs. 26,875.

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