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A certain sum amounts to Rs.291600 in 2 years and to Rs.314928 in 3 years on compound interest compounded annually. How much will be the simple interest (in Rs.) on Rs.40000 at the same rate for 2 years?
1. 6400
2. 8000
3. 7500
4. 9600

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Correct Answer - Option 1 : 6400

Given:

Amount in 2 years = Rs.291600

Amount in 3 years = Rs.314928

Formula:

Let P = Principal, R = rate of interest and N = time period

Compound interest = P(1 + R/100)n - P

Amount = P(1 + R/100)n

Simple interest = PNR/100

Calculation:

⇒ 291600 = P(1 + R/100)2

⇒ 314928 = P(1 + R/100)3

⇒ 1.08 = (1 + R/100)

⇒ R = 8%

Rate of interest is 8% per annum.

Then,

Simple interest = 40000 × 8 × 2/100 = Rs.6400

∴ simple interest on Rs.40000 at the same rate for 2 years is Rs.6400.

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