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.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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