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Question 1:
The difference between the compound interest compounded annually and the simple interest on a certain sum for 2 years at 6% per annum is $ 18.
Find the sum.
A. 5000
Feedback Let the sum be $ 100. Then,
SI = $ (100 × 6 × 2/100) = $ 12 and
compound interest = $ {100 × (1 + 6/100)² - 100}
= $ {(100 × 53/50 × 53/50) - 100} = $ (2809/25 - 100) = $ 309/25
Therefore, (CI) - (SI) = $ (309/25 – 100) = $ 9/25
If the difference between the CI and SI is $ 9/25, then the sum = $ 100
If the difference between the CI and SI is $ 18, then the sum = $ (100 × 25/9 × 18 ) = $ 5000
Hence, the required sum is $ 5000.
B. 6000
C. 7000
D. 8000

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