Question

A sum of money at compound interest amount to rs 3920 in 1 year and 4390.4 in 2 year find the principal

Answer 1

Let Principal be P

Formula of compound interest,

Amount = P [ 1 + r /100 ] ^ n

r : rate of interest
n : time in years

For 1 Year,

3920 = P [ 1 + r / 100 ] ¹
[ 1 + r /100 ] = 3920 / P ........(1)

For 2 Years,

4390.4 = P [ 1 + r /100 ] ²......(2)

From (1) and (2)

4390.4 = P ( 3920 / P ) ²

4390.4 = P ( 15366400 ) ÷ P²

4390.4 = 15366400 ÷ P

P = 15366400 ÷ 4390.4

P = 3500