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Question

Find the difference between simple interest and compound interest on Rs 4,000 for two years at 10% per annum.

A
Rs 40
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B
Rs 50
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C
Rs 45
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D
Rs 60
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Solution

The correct option is A Rs 40
For ,
N=2years
R=10 %
P=Rs4,000
We have S.I.=PNR100=4,000×2×10100=Rs800
And on interest being compounded for 2 years and R=10 %, Amount=P(1+R100)N=4,000×(1+10100)2=4,000×1.1×1.1=Rs.4,840
So, C.I.=AP=4,8404,000=840
And required difference C.I.S.I.=840800=Rs40

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