Question

7. The difference between the compound interest and simple interest on a certain sum of money
at 5% per annum for 3 years is 30.50. Find the sum.
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Answer 1

Answer:

Let x be the Principal.

CI = P * (1 + R/100)^N - P where CI is Compound Interest, P is Pincipal, R is rate of Interest & N is No. of years.

And SI = PNR/100 where SI is Simple Interest & all other terms are same as above.

x * (1 + 5/100)^3 - x - x * 3 * 5/100 = 122

i.e. x * 1.05^3 - x - 0.15x = 122

i.e. 1.157625x - x - 0.15x = 122

i.e. 0.007625x = 122

i.e. x = 122/0.007625

i.e. x = 16000

So, the Principal is Rs. 16,000/-.