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    Question

    What is the principal sum if the

    difference between simple interest (SI) and compound interest (CI), compounded annually, on a certain amount over 2 years at an annual rate of 15% is Rs. 90?
    A Rs.5000 Correct Answer Incorrect Answer
    B Rs.4800 Correct Answer Incorrect Answer
    C Rs.4200 Correct Answer Incorrect Answer
    D Rs.4000 Correct Answer Incorrect Answer

    Solution

    ATQ,

    Let, the sum of money is Rs. 100x CI earned at the end of 2 years = [(1.15)2 – 1] × 100x = Rs. 32.25x SI earned at the end of 2 years = 0.15 × 2 × 100x = Rs. 30x So, 32.25x – 30x = 90 Or, 2.25x = 90 Or, x = 40 Desired sum = 40 × 100 = Rs.4000

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