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    Question

    A person invested ₹15,000 at a simple interest rate of

    20% per annum. Had the amount been invested at a compound interest rate of 20% per annum, compounded annually, how much additional interest would he have earned after 2 years?
    A Rs. 480 Correct Answer Incorrect Answer
    B Rs. 500 Correct Answer Incorrect Answer
    C Rs. 750 Correct Answer Incorrect Answer
    D Rs. 600 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    Simple interest = Sum X (rate of interest/100) X (time in years) Simple interest earned in two years = 15000 X (20/100) X 2 = Rs. 6,000 And compound interest earned in two years: = 15000 X {1 + (20/100) }2 - 15000 = Rs. 6,600 So, required difference = 6600 - 6000 = Rs. 600

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