Umesh earns a simple interest of Rs1 600 on a certain sum in two years at the rate of 4 per annum Ho...........

Quantitative Aptitude (MTS) Simple Interest

Umesh earns a simple interest of Rs1,600 on a certain sum in two years at the rate of 4% per annum. How much more interest

would he have earned if he had invested the same sum at 4% interest per annum, compounded annually?

This questions was previously asked in

SSC MTS 6th July 2022 Shift-1

Rs48

Rs64

Rs32

Rs20

- Calculate the principal:

- Using simple interest formula:

- Interest (I) = Principal (P) × Rate (R) × Time (T) / 100

- Here, Rs1,600 = P × 4 × 2 / 100

- P = Rs20,000

- Calculate compound interest for 2 years:

- A = P(1 + R/100)^T

- A = 20000(1 + 0.04)^2 = 20000 × 1.0816

- A ˜ Rs21,632

- Compound interest = Total amount - Principal

- Compound interest = Rs21,632 - Rs20,000 = Rs1,632

- Difference between compound and simple interest:

- Difference = Rs1,632 - Rs1,600 = Rs32

- Option 3, Rs32 is the correct answer.

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