What is the difference between compound interest and simple interest for 2 yr on the sum of RS. 1250 at 4% pa?

A) RS.3

B) RS.4

C) RS.2

D) RS.8

Correct answer:
C) RS.2

Description for Correct answer:

Given, P = RS. 1250, n = 2yr and R = 4%

According to the formula,

Difference between compound interest and simple interest = \( \Large \frac{PR^{2}}{100^{2}} \)

Required difference=\( \Large \frac{1250\times 4\times 4}{100\times 100} \)=RS.2



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