Register Now

Login

Lost Password

Lost your password? Please enter your email address. You will receive a link and will create a new password via email.

A person deposited a sum of of Rs 6000 in a bank at 5% per annum simple interest. Another person deposited Rs 5000 at 8% per annum compound interest. After two years, the difference of their interest will be =

a) Rs. 230
b) Rs. 232
c) Rs. 832
d) Rs. 600

Answer: b
Explanation:
$$\eqalign{ & {\text{Principal (}}{{\text{P}}_1}{\text{) = Rs. 6000}} \cr & {\text{Time (t) = 2 years}} \cr & {\text{Rate % = 5% }} \cr & {\text{Simple interest}} {\text{ = }}\frac{{6000 \times 5 \times 2}}{{100}}{\text{ = Rs. 600}} \cr & {\text{Principal (}}{{\text{P}}_2}{\text{) = Rs. 5000}} \cr & {\text{Time (t) = 2 years}} \cr & {\text{Rate % = 8% }} \cr} $$
2 year effective rate for Compound interest
$$\eqalign{ & = 8 + 8 + \frac{{8 \times 8}}{{100}} = 16.64\% \cr & {\text{Compound}}\,{\text{Interest}} \cr & {\text{ = 5000}} \times \frac{{16.64}}{{100}} = {\text{Rs}}{\text{. 832}} \cr & {\text{Difference}} {\text{ = Rs}}{\text{. }}\left( {832 – 600} \right) \cr & = {\text{Rs}}{\text{.}}\,232 \cr & {\text{ }} \cr} $$

Join The Discussion