1.

The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 8% per annum is Rs. 40. What is the sum?1). Rs. 125002). Rs. 62503). Rs. 250004). Rs. 18750

Answer»

We know the formula for compound interest -

$(\Rightarrow {\RM{CI}} = {\rm{}}\left[ {{\rm{P}}\left\{ {{{\left( {1{\rm{}} + {\rm{}}\frac{{\rm{R}}}{{100}}} \right)}^t} - 1} \right\}} \right])$

Where,

CI = Compound interest

P = PRINCIPAL

R = Rate of interest

T = Time period

Let the principal be P

CI = P (1 + 8/100) 2 - P = 104P/625

SI = P × 8 × 2/100 = 4P/25

CI - SI = 40

104P/625 - 4P/25 = 40

P = 40 × 625/4 = RS. 6250


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