The difference between simple interest and compound interest on ₹ 2500 at 4% per annum for two years is (in ₹ ):
- A₹ 40
- B₹ 4
- C₹ 45
- D₹ 14
Solution & Step-by-step Explanation
The formula for the difference (D) between compound interest and simple interest for 2 years is given by:
D=P(
100
R
)
2
Where:
Principal (P) = ₹ 2500
Rate of interest (R) = 4% per annum
Substituting the values into the formula:
D=2500(
100
4
)
2
D=2500×
10000
16
D=
10000
2500×16
=
10000
40000
=4
Thus, the difference between CI and SI is ₹ 4.
D=P(
100
R
)
2
Where:
Principal (P) = ₹ 2500
Rate of interest (R) = 4% per annum
Substituting the values into the formula:
D=2500(
100
4
)
2
D=2500×
10000
16
D=
10000
2500×16
=
10000
40000
=4
Thus, the difference between CI and SI is ₹ 4.