Question

The difference between the compound interest and simple interest for the amount Rs 5000/- in 2 years is Rs. 32. Then the rate of interest per annum is:

Accepted Answer

B. The formula for the difference between CI and SI for 2 years is: $$	ext{Diff} = P \left(\frac{R}{100}ight)^2$$ Given Diff = 32 and $P = 5000$: $$32 = 5000 \left(\frac{R}{100}ight)^2$$ $$\frac{32}{5000} = \frac{R^2}{10000}$$ $$R^2 = \frac{32 	imes 10000}{5000} = 64$$ $$R = 8\%$$

Difference between CI and SI

Explanation

Practise this under exam conditions