A person invests Rs10 000 at the rate of 10 per annum for 2 years on simple interest How much more i...........

Quantitative Aptitude (MTS) Simple Interest

A person invests Rs10,000 at the rate of 10% per annum for 2 years on simple interest. How much more interest will be earned if he his paid compound interest instead of simple interest,interest being compounded annually?

This questions was previously asked in

SSC MTS 13th October 2021 Shift-2

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Rs1,000

Rs4,100

Rs2,100

Rs1

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Explanation:

Correct option 1: 100
Given
Principal = Rs.10,000
Rate = 10%
Time = 2 years
Formula used
Simple interest = (Principal x rate x time)/100
Compound interest = Amount - Principal
Amount = P(1 + r%)^t
where p, r and t are principal, rate and time respectively
Solution
Simple interest = (10,000 x 10 x 2)/100
⇒ 2000
Compound interest = 10,000 (1 + 10% ) 2 - 10,000
⇒ 10,000 x (110/100)²-10,000
⇒ 10,000 (11/10)² - 10,000
⇒ 10,000 × (121/100) - 10,000
⇒ 12100 - 10,000 = 2100
Rs. 100 i.e. (2100 - 2000) will be paid as more compound interest than simple interest.