Correct Answer - Option 1 : Rs 50000

**Given**

The difference between the compound interest and simple interest on a certain sum of money at 10% per annum for 2 years is Rs 500.

**Formula used**

CI - SI = (P × R^{2})/(100)^{2}

CI = Compound interest

SI = Simple interest

P = Principal

R = Rate

**Calculation**

According to question

⇒ 500 = (P × (10)^{2})/10000

⇒ P = (500 × 10000)/100

**∴ Principal is Rs.50000**