Compound returns generated on a Rs.44000 principal over two years total Rs.1193.60. What simple return would accumulate on this exact principal under identical conditions over the same duration?
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Answer: C. Rs.10,560
Explanation
The compound interest generated over two years on forty-four thousand is eleven ninety-three point sixty. Determining the underlying annual interest rate allows us to compute the corresponding simple interest for the exact same principal and duration. Calculating simple interest using this derived rate over the two-year period results in a total return of ten thousand five hundred sixty. Compound interest yields higher total returns than simple interest because interest earns additional interest over time. Simple interest grows at a constant linear rate each year based strictly on the initial principal amount. Comparing compound and simple returns requires extracting the interest rate parameter from the compound growth formula.
Option A overestimates the simple interest return by confusing compound growth factors with linear accrual. Option B results from an incorrect intermediate interest rate calculation during the formula derivation. Option D underestimates the simple interest accumulation when compared to the baseline principal and duration.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
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