Siddhant invested some money in HDFC at 4% per annum rate of interest. What would be the corresponding simple interest (in ₹) if after 2 years, Siddhant got ₹255 as compound interest, considering annual compounding?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. 250.
Compound Interest (CI) = ₹255
Time = 2 years
Rate = 4% per annum (compounded annually)
CI for 2 years = P × (1 + R/100)² - P
₹255 = P × (1.04)² - P = P × (1.0816 - 1) = P × 0.0816
So, P = 255 / 0.0816 = ₹3,125
SI = (P × R × T) / 100 = (3125 × 4 × 2) / 100 = ₹250