Discussion

Question:

The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Re. 1. The sum (in Rs.) is:

Explanation:

Let the sum be Rs. x. Then,

C.I. = $[x {(1 + \frac{4}{100})}^{2} - x] = (\frac{676}{625} x - x) = \frac{51}{625} x$

S.I. = $\frac{x \times 4 \times 2}{100} = \frac{2 x}{25}$

$\Rightarrow \frac{51 x}{625} - \frac{2 x}{25} = 1$

∴ x = 625.

Hence, option (a).

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