Question 72

The compound interest on an amount for 2 years at 5% per annum compounded annually is ₹205. The simple interest is:

Solution

If P is the principal,

According to question, compound interest on an amount for 2 years at 5% per annum compounded annually is ₹205

$$P\times (105\div100) \times (105\div100) = P + 205$$

$$1.1025 P = P\times 205$$

$$1.1025 P - P = 205$$

$$P = \frac{205}{0.1025} = 2000$$

Now S I, for 2 years,

$$\frac{P\times 2\times 5}{100} = ₹ 200$$

Option C is correct.

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