Govind invested some money in HDFC at 4% per annum rate of interest. What would be the corresponding simple interest (in ₹) if after 2 years, Govind got ₹280.5 as compound interest, considering annual compounding?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. 275.
Let principal = P, rate = 4% per annum, time = 2 years
Compound interest = P × [(1 + 4/100)2 − 1]
280.5 = P × [(1.4)2 - 1]
280.5 = P × (1.0816 - 1]
280.5 = P × 0.0816
P = 280.5 ÷ 0.0816 = 3437.5
Simple interest = P × R × T ÷ 100 = 3437.5 × 4 × 2 ÷ 100 = 275