The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Re.1. The sum (in Rs.) is:

625

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638

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640

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630

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Solution

The correct option is A
625

Let the sum be Rs.x. Then

$C . I = (x {(1 + \frac{4}{100})}^{2} - x) = \frac{51 x}{625}$

$S . I . = \frac{x \times 4 \times 2}{100} = \frac{2 x}{25}$

$x = 625$

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