The difference between compound interest and simple interest on 2500 for 2 years

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Question

The difference between compound interest and simple interest on 2500 for 2 years at 4% per annum is

Options:

A . 4

B . 40

C . 14

D . 45

Answer: Option A
Answer: (a)S.I. = Rs.${2500 × 2 × 4}/100$ = Rs.200C.I. = Rs.2500$[(1 + 4/100)^2 - 1]$= Rs.2500$[(26/25)^2 - 1]$= Rs.${(676 - 625)}/625$ × 2500= Rs.$51/625 × 2500$ = Rs.204The required difference= C.I. - S.I. = Rs.(204 - 200) = Rs.4Using Rule 6,Here, C.I. - S.I.= ?, P = Rs.2500, R = 4%, T = 2C.I. - S.I.= P$(R/100)^2$= 2500$(4/100)^2$= 2500 × $1/25 × 1/25$C.I.–S.I. = Rs.4

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