Question

The difference between simple and compound interests compounded annually on a certain sum of money for $2$ years at $4\%$ per annum is Rs. $1000$. The sum is:

• A. $625$
• B. $6250$
• C. $62500$
• D. $625000$

Answer 1

The correct option is D $625000$

SI - CI $=Rs.1000$
$P=Rs.?$
$n=2$ years
$r=4\%$
Difference between simple interest and compound interest for 2 years $=P{\left(\frac{r}{100}\right)}^2$
$1000=P\times {\left(\frac{4}{100}\right)}^2$
$P=Rs.625000$