Question

Difference of the compound interest received in first year and second year at 20% per annum at CI is Rs 1200 then find the sum?

Answer 1

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Answer 2

Given,

The difference in the compound interest from $2^{nd}$ and $1^{st}$ year is Rs 1200, at a 20% Interest rate per annum.

To Find,

The principal Amount.

Solution,

Let us say the principal amount = $P$

Let us say the Interest rate = r = 20

The formula for compound interest = $P(1 + \frac{r}{100})^{n}$

Since the difference in compound interest for the two years is Rs 1200

⇒ $P(1 + \frac{20}{100})^{2} - P(1 + \frac{20}{100}) = 1200$

⇒ $P (1.44) - P (1.2) = 1200$

⇒ $P(0.24) = 1200$

⇒$P = \frac{1200}{0.24} = 5000$

Henceforth, the principal amount is Rs.5000/-.