Question
If the difference between compound interest (compounded
annually) and simple interest earned in two years at 25% p.a., is Rs. 1,000, then find the sum invested.Solution
Let the sum invested be Rs. 'P' Simple interest earned = {(P × 25 × 2)/100} = Rs. '0.5P' Compound interest = P × [{1 + (25/100)}² – 1] = Rs. '0.5625P' ATQ; 0.5625P – 0.5P = 1000 Or, 0.0625P = 1000 So, P = 16,000
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