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    Question

    The simple interest on a sum for 2 years at 10% per

    annum is Rs 4,000. Find the difference between the compound interest and the simple interest on the same sum, at the same rate and time.
    A 800 Correct Answer Incorrect Answer
    B 300 Correct Answer Incorrect Answer
    C 500 Correct Answer Incorrect Answer
    D 200 Correct Answer Incorrect Answer

    Solution

    Let principal = P. SI for 2 years = P × 10 × 2 /100 = P/5 Given P/5 = 4,000 ⇒ P = 20,000 Difference (CI − SI) for 2 years at rate r% = P × (r/100)² r = 10 ⇒ r/100 = 0.10 Difference = 20,000 × (0.10)² = 20,000 × 0.01 = Rs 200.

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