Question

What will be the difference between the compound interest (interest is compounded annually) and simple interest on a sum of Rs. 6400 at the rate of 10% per annum for 2 years?

• A. Rs. 90
• B. Rs. 72
• C. Rs. 128
• D. Rs. 64

Answer 1

Answer:

D. Rs. 64

Effective rate difference for 2 years = (r2/100) = (102/100) = 1% ∴ Required difference = 1% of 6400 = 6400 × (1/100) = 64.