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The compound interest on a certain sum at 4% per annum (compounded annually) for 2 years is ₹ 102. On the same principal at the same rate for the same time, the simple interest will be:
1. ₹100
2. ₹99
3. ₹98
4. ₹101

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Correct Answer - Option 1 : ₹100

Given:

Compound interest on a sum = Rs. 102

Rate of interest = 4%

Time = 2 years

Formula Used:

For Compound Interest

CI = P(1 + r/100)t – P

For Simple Interest

SI = P × R/100 × T

Calculation:

102 = P( 1 + 4/100)2 - P

⇒ 102 = P(104/100)2 – P

⇒ 102 = 1.0816P – P

⇒ 102 = 0.0816P

⇒ P = 1250

Now to calculate SI

SI = 1250 × 4/100 × 2 = 100

∴ The simple interest will be Rs.100

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