Question

Find the Sum
On what sum does the difference between the compound interest and simple interest for 3 years at 10% is Rs. 31?

Answer 1

Lets say that the Amount in case of simple interest be A1 and amount in case of compound interest by A2.

For simple interest, A1 = P + Prt/10 = P(1 + rt/100) = P(1.30)= 1.30P
(Since t = 3yrs and r = 10%)

For compound interest, A2 = P(1+r/100)^t = P(1 + 10/100)^3 = P(1.331)= 1.331P

So we have the following two equations:

A2 = 1.331P ------------- (1)
A1 = 1.30P -------------- (2)

Subtracting (2) from (1), we get A2 - A1 = 0.031P

We have also been given that A2 - A1 = 31.

So we get 0.031P = 31

Hence P = 1000

So our answer is Rs. 1000

(Since t = 3yrs and r = 10%)