CA Foundation · Quantitative Aptitude · Mathematics of Finance
For a certain sum lent for 3 years at 10% per annum, the difference between compound interest (compounded annually) and simple interest is ₹465. What is the sum?
The sum is ₹15,000. Over 3 years at 10%, compound interest exceeds simple interest by 0.031 of the principal, since 1.331 − 1.3 = 0.031. Dividing 465 by 0.031 gives ₹15,000.
- A₹4,650
- B₹15,000Correct
- C₹20,000
- D₹46,500
Explanation
CI − SI = P[(1.1)³ − 1 − 0.3] = P(1.331 − 1.3) = 0.031P. So P = 465 ÷ 0.031 = ₹15,000. Using the two-year formula P×(r²) gives ₹46,500, which is wrong for 3 years.
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