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A deposited Rs 6000 in a bank at 5% Per annum simple interest. B deposited Rs 5000 at 8% P.a Compound interest. After 2 years the difference between their interest will be:_________?

Correct answer: B. Rs 232

  • A. Rs 230
  • B. Rs 232
  • C. Rs 600
  • D. Rs 832

Explanation

A's simple interest is 6,000 Rs x 5% x 2 = 600 Rs. B's compound interest is 5,000 Rs x [(1.08)^2 - 1] = 832 Rs, so the difference is 832 Rs - 600 Rs = 232 Rs. Students may choose 230 Rs by rounding the compound interest calculation.

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