Q172
ArithmeticSimple & Compound Interest
On a certain some of money, the simple interest for 2 years is ₹ 350 at the rate of 4% per annum. If it was invested at compound interest at the same rate for the same duration as before, how much more interest would be earned?
- a.₹ 3.50
- b.₹ 7
- c.₹ 14
- d.₹ 35
Answer: (B) ₹ 7
SI of ₹ 350 for 2 years at 4% means the principal is 350 ÷ 0·08 = ₹ 4,375. For 2 years, CI − SI = P × $(\frac{r}{100})^2$ = 4375 × 0·0016 = ₹ 7. ₹ 3.50 is only half of this extra interest.