Question 66

If the compound interest on a certain sum of money for 2 years at 4% per annum compounded annually is Rs. 102, then the simple interest on the same sum of money at the same interest rate and for the same period is

Solution

Let principal sum = Rs. $$x$$

Rate of interest = 4% for 2 years

Compound interest = $$P[(1+\frac{r}{100})^t-1]$$

=> $$P[(1+\frac{4}{100})^2-1]=102$$

=> $$P[(\frac{26}{25})^2-1]=102$$

=> $$P(\frac{676-625}{625})=102$$

=> $$P=625\times2=Rs.$$ $$1250$$

$$\therefore$$ Simple interest = $$\frac{P\times r\times t}{100}$$

= $$\frac{1250\times4\times2}{100}=Rs.$$ $$100$$

=> Ans - (B)

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