If the difference between the compound and simple interests on a certain sum of money for 2 years at 20% per annum is ₹64, then the sum in ₹ will be:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 1600
For 2 years, compound interest is more than simple interest only by the interest earned on the first year’s interest. So the difference is \(P\left(\frac{R}{100}\right)^2\).
\(\displaystyle P\left(\frac{20}{100}\right)^2=64\)
\(0.04P=64\)
\(P=1600\)