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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. Find the sum when the Interest is compounded annually.


1. Rs 50000
2. Rs 55000
3. Rs 40000
4. Rs 65000

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Best answer
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 × R2)/(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

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