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Question
Suppose for the principal P, rate R% and time T, the simple interest is S and compound interest is C. Consider the possibilities.
- C > S
- C = S
- C < S
Then
Options
only (i) is correct.
either (i) or (ii) is correct.
either (ii) or (iii) is correct.
only (iii) is correct.
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Solution
Only C > S.
Explanation:
Let the principal (P) = Rs. 100
Rate of interest (R) = 100% and time period (T) = 2 yr
Then, simple interest = `(P xx R xx T)/100`
= `(100 xx 10 xx 2)/100`
= ₹ 20
We know that,
`A = P(1 + R/100)^T`
= `100(1 + 10/100)^2`
= `100 xx 11/10 xx 11/10`
= ₹ 21
∴ Compound interest, CI = A – P
= ₹ 121 – ₹ 100
= ₹ 21
So, C > S
Hence, C > S
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