Kanika took a loan of Rs10 000 for 2 years on compound interest at the rate of 5 per annum interest ...........

Quantitative Aptitude (MTS) Compound Interest

Kanika took a loan of Rs10,000 for 2 years on compound interest at the rate of 5% per annum, interest being compounded

annually. How much money would she have saved if she had taken the loan on simple interest?

This questions was previously asked in

SSC MTS 27th October 2021 Shift-1

Rs1,025

Rs1,000

Rs25

Rs400

- Compound Interest Calculation:

- Formula: A = P(1 + r/n)^(nt)

- P = Rs10,000, r = 5% or 0.05, t = 2 years, n = 1 (compounded annually)

- A = 10,000(1 + 0.05)^2

- A = 10,000 * 1.1025 = Rs11,025

- Simple Interest Calculation:

- Formula: A = P + Prt

- A = 10,000 + 10,000 * 0.05 * 2

- A = 10,000 + 1,000 = Rs11,000

- Difference in Interest Amounts:

- Compound = Rs11,025 - Principal = Rs1,025

- Simple = Rs11,000 - Principal = Rs1,000

- Saved by choosing simple interest = Rs1,025 - Rs1,000 = Rs25

- Correct Option: Option 3

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