Multiple choice

Find the difference between the interests earned, when Rs. 200 was deposited under a recurring deposit scheme for three years that gives 8% simple interest and Rs. 2,400 is deposited under CI scheme that offers 10% p.a.interest compounded bi-annually for three years.

  1. Rs. 72

  2. Rs. 60

  3. Rs. 53.33

  4. Rs. 64.67

  5. Rs. 90

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A Correct answer
Explanation

For the recurring deposit: Interest = P * n * (n+1) / 2 * r / 1200. With P=200, n=36, r=8%, interest = 200 * 36 * 37 / 2 * 8 / 1200 = 888. For the CI scheme: P=2400, r=10% compounded bi-annually (5% per 6 months) for 3 years (6 periods). Amount = 2400 * (1.05)^6 = 3215.57. Interest = 3215.57 - 2400 = 815.57. The difference is 888 - 815.57 = 72.43, which is closest to 72.