Question

What is the difference between the compound interest and simple interest on Rs.2500 for 2 years at 4% p.a. ?

• A. Rs.0
• B. Rs.2
• C. Rs.3
• D. Rs.4

Answer 1

Answer: (D)

Rs.4

S.I. $=\frac{2500\times 2\times 4}{100}=Rs.200$
C.I. $=2500{(1+\frac{4}{100})}^2-2500=2500\times \frac{26}{25}\times \frac{26}{25}-2500$
= 2704 - 2500 = Rs.204 C.I. - S.I. = Rs.204 - Rs.200 = Rs.4