Question

The difference between simple interest and compound interest computed anually on a certain sum of money for 2 years at 4% annual

Answer 1

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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

630

640

650

Answer: Option A

Explanation:

Let the sum be Rs. x. Then,

C.I. =

x

1 +

4

2

- x

=

676

x

- x

=

51

x.

100

625

625

S.I. =

x x 4 x 2

=

2x

.

100

25

51x

-

2x

= 1

625

25

x = 625.