Question : The compound interest (compounding annually) on a certain sum at the rate of 8% per annum for two years is INR 6,656. What would be the simple interest on the same sum at the same rate of interest for two years?
Option 1: INR 5,600
Option 2: INR 6,224
Option 3: INR 6,400
Option 4: INR 6,336
Correct Answer: INR 6,400
Solution :
Given: The compound interest (compounding annually) on a certain sum at the rate of 8% per annum for two years is INR 6,656.
We know the formulas,
where
According to the question,
⇒
⇒
⇒
⇒
⇒
The simple interest on the same sum at the same rate of interest for two years
Hence, the correct answer is INR 6,400.
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