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    Question

    A man invested Rs. 30,000 at simple interest of 8% p.a.

    If he had instead invested the same sum on compound interest of 8% p.a., compounded annually, then how much more he would have earned as interest after 4 years?
    A Rs.1277.7 Correct Answer Incorrect Answer
    B Rs.1388.8 Correct Answer Incorrect Answer
    C Rs.1,123.2 Correct Answer Incorrect Answer
    D Rs.1,214.7 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    ATQ, Simple interest = Sum × (rate of interest/100) × (time in years) Simple interest earned in four years = 30,000 × (8/100) × 4 = Rs. 9,600 Compound interest earned in four years: = 30,000 × {1 + (8/100)}⁴ - 30,000 = 30,000 × (1.08)⁴ - 30,000 = 30,000 × 1.36049 - 30,000 = Rs. 40,814.7 - 30,000 = Rs. 10,814.7 So, required difference = 10,814.7 - 9,600 = Rs. 1,214.7

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