An amount of ₹5,000 is invested at 8% per annum for 2 years. If the investment is made under both compound interest and simple interest at the same rate and for the same period, what is the difference between the compound interest and the simple interest?
- A. ₹35
- B. ₹36
- C. ₹38
- D. ₹32 ✓
Correct Answer: D. ₹32
Explanation
The difference between CI and SI for 2 years is D = P \times \left(\frac{R}{100}\right)^2. Thus, D = 5000 \times \left(\frac{8}{100}\right)^2 = 5000 \times 0.0064 = 32.
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