Nutan gets two offers of loan from a bank and an app. The app offered Rs. 10,000 at 15 Percent per annum compounded annually for 2 years and the bank offered the same amount at the same rate and for the same time but on simple interest. Find the difference between the interests.
Answer & explanation
Correct answer: option 4
Principal (P) = Rs 10000
Rate(R) = 15% PA
Time(T) = 2 years
Rate of S.I. for 2 years = R% + R%
= 15% + 15%
= 30%
Rate of C.I. for 2 years = R% + R% + \(\frac{R×R}{100}\)%
= 15% + 15% + \(\frac{15×15}{100}\)%
= 30% + \(\frac{225}{100}\)%
= 32.25 %
Difference = 32.25% - 30% = 2.25%
So, 2.25% of 10000 = Rs 225