Question 59

The difference between simple and compound interests compounded annually, on a certain sum of money for 2 years at 6% pa is ₹ 3.6. What is the sum?

Solution

Let the principal be Rs.10000x
Simple Interest for 1 year at 6% per annum = Rs.600x
Simple Interest for 2 years at 6% per annum = Rs.600*2 = Rs.1200x
Amount of Compound Interest for 2 years at 6% per annum = $$10000x \times \dfrac{106}{100} \times \dfrac{106}{100} = Rs.11236x
Compound Interest = Rs.11236x - Rs.10000x = Rs.1236x
Difference between SI and CI = 1236x - 1200x = Rs.36x
Given, 36x = Rs.3.6
=> x = 0.1
Therefore, Principal = Rs.10000x = Rs.10000*0.1 = Rs.1000


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