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, the difference between Compound Interest (CI) and Simple Interest (SI) is given by:
$\text{CI} - \text{SI} = P \left(\frac{r}{100}\right)^2$
Given:
- Rate $r = 20\%$
- Difference = ₹64
Step 1: Substitute values
$64 = P \left(\frac{20}{100}\right)^2$
$64 = P \times \left(\frac{1}{5}\right)^2$
$64 = P \times \frac{1}{25}$
Step 2: Find P
$P = 64 \times 25 =1600$