On a certain sum lent for 2 years, compound interest exceeds simple interest by ₹40 when the rate is 10% per annum. If the same sum were lent for the same 2 years at 15% per annum instead, by how much (in ₹) would compound interest exceed simple interest?

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Accepted Answer

90. For 2 years the gap is P(r/100)², the interest earned on the first year's interest. At 10%, 0.01P = 40 → P = ₹4000. At 15% the gap is 4000 × (0.15)² = ₹90. (Check: SI = ₹1200 and CI = 4000(1.15² − 1) = ₹1290.) The gap grows with the SQUARE of the rate, so scaling ₹40 by 15/10 to get ₹60 understates it badly.

On a certain sum lent for 2 years, compound interest exceeds simple interest by ₹40 when the rate is 10% per annum. If the same sum were lent for the same 2 years at 15% per annum instead, by how much (in ₹) would compound interest exceed simple interest?

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