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The difference between the simple interest and the compound interest on Rs 5000 at 10% P.a for 3 years is:_______?

Correct answer: E. None of these

  • A. Rs 145
  • B. Rs 150
  • C. Rs 165
  • D. Rs 180
  • E. None of these

Explanation

The simple interest is 5,000 Rs x 10% x 3 = 1,500 Rs. The compound interest is 5,000 Rs x [(1.10)^3 - 1] = 1,655 Rs, so the difference is 1,655 Rs - 1,500 Rs = 155 Rs, which is not listed. Students may choose 150 Rs by assuming compound interest is the same as simple interest for the extra years, but option e correctly indicates that none of the numerical options is correct.

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