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    Question

    On a certain sum, the simple interest for 2 years at 10%

    per annum is Rs 1000. Find the difference between the compound interest and simple interest on the same sum, at the same rate and for the same period.
    A Rs 40 Correct Answer Incorrect Answer
    B Rs 80 Correct Answer Incorrect Answer
    C Rs 50 Correct Answer Incorrect Answer
    D Rs 20 Correct Answer Incorrect Answer

    Solution

    Let principal = P. SI for 2 years = (P × 10 × 2)/100 = (P/5) Given P/5 = 1000 ⇒ P = 5000 Difference (CI − SI) for 2 years at rate r% is: P × (r/100)² Here r = 10% ⇒ r/100 = 0.10 Difference = 5000 × (0.10)² = 5000 × 0.01 = Rs 50.

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