The compound interest on a certain sum of money for 2 years at 5% per annum is Rs. 1025. What would be the simple interest on the same sum at the same rate for the same time? MCQ with Answer and Explanation

Effective rate of compound interest for 2 years at 5% = 5 + 5 + (55)/100 = 10.25%. Simple interest rate = 5 * 2 = 10%. Given 10.25% of sum = 1025 => 1% of sum = 100. Simple Interest = 10% of sum = 10 * 100 = Rs. 1000.