Question

A person gives a loan of Rs. 50,000 at a rate of 8% per annum simple interest for 2 years and another Rs. 50,000 at the same rate compounded annually for 2 years. After 2 years the difference in the amount he gets back is
1. 300
2. 320
3. 360
4. 380

Answer 1

Correct Answer - Option 2 : 320

Given:

Sum is Rs. 50,000 

Rate of interest is 8% for 2 years

Formula Used:

R = √(D/P) × 100,

Where

R is rate of interest,

D is CI – SI  

P is principle

Concept Used:

As the principle is same, then change in final amount is change in Interest

Calculation:

Using the formula,

⇒ 8 = √(D/50,000) × 100

⇒ 8/100 = √(D/50,000)

⇒ 2/25 = √(D/50,000)

Taking square on both sides,

⇒ 2/25 × 2/25 = D/50,000

⇒ D = (2 × 2 × 50,000)/(25 × 25)

⇒ D = 4 × 80

⇒ D = 320

∴ The difference in the amount is Rs. 320.