What will be the difference between the compound interest and simple interest at the rate of 5% p.a. on an amount of Rs. 4000 at the end of two years?
Answer & explanation
Correct answer: option 1
5% = \(\frac{1}{20}\)
\(\frac{Difference}{Principal}\) = \(\frac{1^2}{20^2}\) = \(\frac{1}{400}\)
Now, ATQ
⇒ Principal = 400R = 4000
⇒ 1R = 10
⇒ Difference = 1R = Rs.10