Multiple choice

Directions: Compare the two quantities in A and B. Quantity A Quantity B P = $ 300 R = 5% T = 2 years Simple interest P = $ 250 R = 5% T = 2 years Compound interest

  1. Quantity A is greater than quantity B.

  2. Quantity B is greater than quantity A.

  3. Both quantities are equal.

  4. The relationship between the quantities cannot be determined.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Quantity A: Simple Interest = 300 * 0.05 * 2 = 30. Quantity B: Compound Interest = 250 * (1 + 0.05)^2 - 250 = 250 * 1.1025 - 250 = 275.625 - 250 = 25.625. 30 > 25.625.

AI explanation

Quantity A is calculated using the simple interest formula SI equals P times R times T divided by 100, giving 300 times 5 times 2 divided by 100, which is \$30. Quantity B is calculated using the compound interest formula CI equals P times 1 plus R over 100 squared minus P, giving 250 times 1.05 squared minus 250, which equals \$25.625. Comparing the two values shows that \$30 is greater than \$25.625, so Quantity A is greater than quantity B.

Keep practicing — related questions