Question

The difference between compound and simple interest on a certain sum of money for 2 years at 2% p.a is ₹ 1. The sum of money is __________

Options

• ₹ 2000

• ₹ 1500

• ₹ 3000

• ₹ 2500

Answer 1

₹ 2500

Explanation;

Hint:

Difference between C.I. and S.I. is given as ₹ 1

Time period (n) = 2 years

Rate of interest (r) = 2% p.a

Formula for difference is

C.I. − S.I. = `"P" xx (1 + "r"/100)^"n"`

Substituting the values in above formula, we get

1 = `"P" xx (2/100)^2`

∴ P = `1 xx (100/2)^2`

= 1 × (50)² 

= ₹ 2500