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Compound interest accrued on a sum of ₹2500 is ₹749 at 14% per annum for a certain number of years. What would be the simple interest accrued on the same amount for the same number of years at 7% per annum?

1. ₹230
2. ₹350
3. ₹349
4. ₹450

Correct answer: ₹350

Solution

The compound interest of ₹749 on ₹2500 at 14% implies the amount is ₹3249. This matches 2 years because ₹2500 × 1.14² = ₹3249. Then simple interest at 7% for 2 years is ₹2500 × 7 × 2 / 100 = ₹350.

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