The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Rs 144. The sum is:
- ARs 180000
- BRs 360000
- CRs 90000
- DRs 270000
Solution & Step-by-step Explanation
The formula for the difference (D) between Compound Interest (CI) and Simple Interest (SI) for a period of 2 years is given by:
D=P(
100
R
)
2
Where:
D=Difference=Rs 144
P=Principal sum
R=Rate of interest per annum=4%
Substituting the values into the formula:
144=P(
100
4
)
2
144=P(
25
1
)
2
144=P×
625
1
P=144×625
P=90000
Therefore, the principal sum is Rs 90000.
D=P(
100
R
)
2
Where:
D=Difference=Rs 144
P=Principal sum
R=Rate of interest per annum=4%
Substituting the values into the formula:
144=P(
100
4
)
2
144=P(
25
1
)
2
144=P×
625
1
P=144×625
P=90000
Therefore, the principal sum is Rs 90000.