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    Question

    The difference between the interest earned from

    investing ₹P in simple interest at an annual rate of 25% and the interest earned from investing the same amount in compound interest at 25% per annum (compounded annually) for two years is ₹525. Determine the value of 'P'.
    A Rs. 7200 Correct Answer Incorrect Answer
    B Rs. 8400 Correct Answer Incorrect Answer
    C Rs. 6600 Correct Answer Incorrect Answer
    D Rs. 9600 Correct Answer Incorrect Answer

    Solution

    Difference between interest when Rs. 'P' is invested on each simple interest and compound interest at 'R%' p.a. in 2 years = (P X R2) ÷ 10000

    So, (P X 252) ÷ 10,000 = 525

    Or, P X 0.0625 = 525

    Or, 'P' = 8,400

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