Question
The difference between the interest earned from
investing ₹P in simple interest at an annual rate of 25% and the interest earned from investing the same amount in compound interest at 25% per annum (compounded annually) for two years is ₹525. Determine the value of 'P'.Solution
Difference between interest when Rs. 'P' is invested on each simple interest and compound interest at 'R%' p.a. in 2 years = (P X R2) ÷ 10000
So, (P X 252) ÷ 10,000 = 525
Or, P X 0.0625 = 525
Or, 'P' = 8,400
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