Question

The difference between the compound interest compounded annually and the simple interest on a certain sum of money for 2 years at 4% per annum is Rs. 20.00. The sum is:
1. Rs. 8,500.00
2. Rs. 10,500.00
3. Rs. 12,500.00
4. Rs. 11,500.00

Answer 1

Correct Answer - Option 3 : Rs. 12,500.00

Given:

Difference between CI and SI for 2 years = Rs.20 

Rate = 4% 

Formulas used:

Difference = Principal × (R/100)²

Calculation:

Rs.20 = Principal × (4/100)²

⇒ 20 = Principal × 4/100 × 4/100 

⇒ 20 × 100/4 × 100/4 = Principal 

∴ Principal = 12500