Correct Answer - Option 4 : 1600

**Given : **

Simple interest on sum for 3 years is rupees 480

Compound interest on the same sum for 2 years is Rs. 336

**Calculations :**

Let the sum be 'P'

Simple interest per year = 480/3 = 160 rupees

Compound interest for 1st year = 160 rupees (Compound interest is equal to simple interest for 1st year)

Compound interest for 2nd year = 336 - 160 = 176 rupees (Compound interest for 2nd year = Interest for 1st year + Interest on 1st year's interest)

Rate of interest(R) = (16/160) × 100 (Interest on 1st year's interest)

⇒ 10%

Now we know

Interest = (P × R × T)/100

160 = (P × 10 × 1)/100 (where R = 10 and T = 1 year)

P = 1600 rupees

**∴ The value of the principle is Rs. 1600 **