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The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 8% per annum is Rs. 40. What is the sum?
- ARs. 12500
- BRs. 6250
- CRs. 25000
- DRs. 18750
Answer not set
Discussion 1
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CCommunity
We know the formula for compound interest -
$(\Rightarrow {\rm{CI}} = {\rm{}}\left[ {{\rm{P}}\left\{ {{{\left( {1{\rm{}} + {\rm{}}\frac{{\rm{r}}}{{100}}} \right)}^t} - 1} \right\}} \right])$
Where,
CI = Compound interest
P = Principal
R = Rate of interest
T = Time period
Let the principal be P
CI = P (1 + 8/100) 2 - P = 104P/625
SI = P × 8 × 2/100 = 4P/25
CI - SI = 40
104P/625 - 4P/25 = 40
P = 40 × 625/4 = Rs. 6250
$(\Rightarrow {\rm{CI}} = {\rm{}}\left[ {{\rm{P}}\left\{ {{{\left( {1{\rm{}} + {\rm{}}\frac{{\rm{r}}}{{100}}} \right)}^t} - 1} \right\}} \right])$
Where,
CI = Compound interest
P = Principal
R = Rate of interest
T = Time period
Let the principal be P
CI = P (1 + 8/100) 2 - P = 104P/625
SI = P × 8 × 2/100 = 4P/25
CI - SI = 40
104P/625 - 4P/25 = 40
P = 40 × 625/4 = Rs. 6250