ECONOMICS
COMPOUND INTEREST
Question
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The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Re. 1. The sum (in Rs.) is:

625


725


6250


7250

Explanation:
Detailed explanation1: The difference between the compounded annually and the simple interest on a certain sum for 2 years at 4% per annum is Rs. 20.
Detailed explanation2: The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 5% per annum is Rs. 100.
Detailed explanation3: Simple interest is based on the principal amount of a loan or deposit. In contrast, compound interest is based on the principal amount and the interest that accumulates on it in every period.
Detailed explanation4: ExpertVerified Answer the difference between simple interest and compound interest on a certain sum of money at 20% per annum for 2 years is 48.
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