The difference between S.I and C.I compounded annually on a certain sum of money for 2 years at 4%p.a is r.s 1. find the sum?Choices:- 600 645 525 625
Question
The difference between S.I and C.I compounded annually on a certain sum of money for 2 years at 4% p.a is r.s 1. Find the sum?
Choices:
- 600
- 645
- 525
- 625
Solution
The difference between Simple Interest (S.I) and Compound Interest (C.I) for 2 years is given by the formula:
P*(R/100)^2
Where: P is the principal amount (the sum of money we are trying to find), R is the rate of interest.
Given in the problem, the difference is Rs. 1 and the rate of interest is 4% per annum. We can substitute these values into the formula and solve for P:
1 = P*(4/100)^2 1 = P*(0.04)^2 1 = P*0.0016 P = 1 / 0.0016 P = 625
So, the sum of money is Rs. 625. Therefore, the correct choice is 625.
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