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The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Rs. 1. The sum is
  • a)
    Rs. 625
  • b)
    Rs. 630
  • c)
    Rs. 640
  • d)
    Rs. 650
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
The difference between simple and compound interests compounded annual...
Let the sum be x.
We know, Amount = Principal (1 + Rate/100)n
Compound interest = Amount - Principal
CI = x (1 + 4/100)2 - x
CI = 51x/625
We know, Simple interest = (P × R × T)/100
SI = (x × 4 × 2)/100 = 2x/25
It is given that CI - SI = 1
⇒ 51x/625 - 2x/25 = 1
⇒ (51x - 50x)/625 = 1
⇒ x = Rs. 625
∴ The sum is Rs. 625
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The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Rs. 1. The sum isa)Rs. 625b)Rs. 630c)Rs. 640d)Rs. 650Correct answer is option 'A'. Can you explain this answer?
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