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On Rs 20,000 for 2 years at 8 per cent, how much more is compound interest than simple interest?
ARs 118
BRs 128
CRs 138
DRs 160
Answer & Solution
Correct answer: B. Rs 128
1. Compound interest = 1600 in year 1 plus 1728 in year 2 = Rs 3,328.
2. Simple interest = (20000 x 8 x 2) / 100 = Rs 3,200.
3. Difference = 3328 - 3200 = Rs 128.
4. The extra Rs 128 is exactly 8 per cent of the first year's interest of Rs 1,600.
5. That is what 'interest on the interest' means over two years.
_Source: NCERT Class 8 Maths Ch7 'Comparing Quantities', section 7.4_
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