The difference between compound and simple interest on a certain sum of money for 2 years at 4% p.a. is Rs. 10. The sum of money is:
Answer & explanation
Correct answer: option 2
4% = \(\frac{1}{25}\)
\(\frac{difference}{Principal}\) = \(\frac{1^2}{25^2}\) = \(\frac{1}{625}\)
Now, ATQ
⇒ 1R = Rs.10
⇒ Principal = 625R = 625 × 10 = Rs.6250