Question : The difference between the compound interest and simple interest on Rs. 5,000 for 2 years at 8% per annum payable yearly is:
Option 1: Rs. 30
Option 2: Rs. 31
Option 3: Rs. 33
Option 4: Rs. 32
Correct Answer: Rs. 32
Solution :
Principal Amount, $P$= Rs. 5000
Rate of interest, $R$ = 8%
Time period, $T$ = 2 years
Difference between compound interest and simple interest for 2 years
= $\frac{{PR^2}}{100^2}$
= $\frac{{5000 × 8^2}}{100^2}$
= $\frac{{50 × 64}}{100}$
= Rs. 32
Hence, the correct answer is Rs. 32.
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