Question

The difference between simple interest and compound interest on Rs 400 at 5% per annum for 2 years is

• A. Rs 1
• B. Rs 10
• C. Rs 230
• D. Rs 27

Answer 1

Answer: (A)

Rs 1

$P=400,r=5,n=2,t=2$
$SI=\frac{Ptr}{100}=\frac{400\times 5\times 2}{100}=40$
$CI=A-P$
$A=P{(1+\frac{r}{100})}^n=400{(1+\frac{5}{100})}^2=400\times \frac{441}{400}$
$CI=441-400=41$
$\therefore CI-SI=41-40=1$