Question

    If the difference between the

    compound interest (compounded annually) and the simple interest accrued over two years at a rate of 20% per annum is ₹400, determine the principal amount invested.
    A 10,000 Correct Answer Incorrect Answer
    B 11,000 Correct Answer Incorrect Answer
    C 12,500 Correct Answer Incorrect Answer
    D 16,250 Correct Answer Incorrect Answer

    Solution

    ATQ, Let the sum invested be Rs. 'S' Simple interest earned = {(S × 20 × 2)/100} = Rs. '0.4S' Compound interest = S × [{1 + (20/100)}2 - 1] = Rs. '0.44S' ATQ; 0.44S - 0.4S = 400 Or, 0.04S = 400 So, S = 10,000

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