Q1. The difference between the simple interest and the compound interest on a certain amount at 5% per annum for two years is ₹ 25. What is the amount?
A ₹ 8000
B ₹ 9000
C ₹ 10,000 Correct
D ₹ 15,000
Explanation
For two years, the difference between compound interest and simple interest is the interest on the first year’s interest. The formula is P × r² / 100². Here the difference is ₹ 25 and the rate is 5%, so P × 25 / 10000 = 25. Hence P = ₹ 10,000. Amounts of ₹ 8000 and ₹ 9000 would give smaller differences, while ₹ 15,000 would give ₹ 37.50 as the difference, not ₹ 25.