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If the compound interest on a certain sum of money for 2 years at 10% per annum is Rs. 1050, what will be the simple interest on the same sum at the same rate for the same period? Options Rs. 1000 Rs. 1030 Rs. 1020 Rs. 1050

Question

If the compound interest on a certain sum of money for 2 years at 10% per annum is Rs. 1050, what will be the simple interest on the same sum at the same rate for the same period?

Options Rs. 1000

Rs. 1030

Rs. 1020

Rs. 1050

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Solution

The difference between compound interest and simple interest for two years at the same rate is given by the interest on the first year's interest.

In this case, the compound interest for 2 years is Rs. 1050.

Let's assume the simple interest for each year is 'x'. So, the simple interest for 2 years would be '2x'.

The compound interest is the sum of the simple interest for the two years and the interest on the first year's interest.

So, we have the equation: 2x + 0.10x = 1050

Solving this equation will give us the value of 'x', which is the simple interest for one year.

Then, we multiply 'x' by 2 to get the simple interest for two years.

Let's solve the equation:

2x + 0.10x = 1050 2.10x = 1050 x = 1050 / 2.10 x = 500

So, the simple interest for one year is Rs. 500.

Therefore, the simple interest for two years would be 2 * 500 = Rs. 1000.

So, the correct option is Rs. 1000.

This problem has been solved

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