Question 120

If the compound interest on a certain sum for two years at 12% per annum is 2,544, the simple interest on it at the same rate for 2 years will be

Solution

Let the principal amount be $$P$$

Compound interest after 2 years at 12% pa = 2544

=> $$P[(1 + \frac{12}{100})^2 - 1] = 2544$$

=> $$P(\frac{784}{625} - 1) = 2544$$

=> $$\frac{159}{625}P = 2544$$

=> $$P = 16 \times 625$$ = Rs. 10,000

Now, S.I. = $$\frac{10,000 * 12 * 2}{100}$$

= Rs. 2,400

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