Question

Simple interest and compound interest on a principal at a certain rate of interest for 2 years is Rs. 7200 and Rs. 7560 respectively. What is the principal?
1. Rs. 24000
2. Rs. 35000
3. Rs. 36000
4. Rs. 32000

Answer 1

Correct Answer - Option 3 : Rs. 36000

Given:

Time(T) = 2 years

Simple interest(SI) = 7200

Compound interest(CI) = 7560

Formula used:

SI = \(\dfrac{P \times R \times T}{100}\)

P = Principal

Difference between SI and CI  for 2 years = Interest on SI of first year

Calculation:

SI for 1 year = 7200/2 = 3600

Difference between SI and CI = 7560 - 7200 = 360

Rate of interest(R) = (360/3600) × 100 = 10%

According to the question:

3600 = \(\dfrac{P \times 10 \times 1}{100}\)

⇒ P = 36000

∴ Principal = Rs. 36000