If the simple interest for 2 years is Rs.500 at 10% rate of interest. Find the…
2025
If the simple interest for 2 years is Rs.500 at 10% rate of interest. Find the compound interest for the same time.
- A.
Rs.525
- B.
Rs.500
- C.
Rs.200
- D.
Rs.600
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Correct answer: A
Given: Time = 2 years, Simple Interest = Rs.500, Rate = 10%.
Find the principal using the simple interest formula: SI = (Principal × Rate × Time)/100.
So, 500 = (P × 10 × 2)/100 ⇒ 500 = (20P)/100 ⇒ 500 = P/5 ⇒ P = 2500.
Compute compound interest using CI = Principal × [(1 + Rate/100)^Time − 1].
CI = 2500 × [(1 + 10/100)^2 − 1] = 2500 × [(1.1)^2 − 1] = 2500 × (1.21 − 1) = 2500 × 0.21 = 525.
Therefore the compound interest for 2 years at 10% is Rs.525.
Note: This is Rs.25 more than the simple interest amount of Rs.500.