Question

on a sum of money for 2years compound interest and simple interest are 328 and 320. find the rate of interest and principal
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Answer 1

Answer:

The formula for compound interest is CI = P*(1+r/100)^n-P

where A= Amount, P= Principal, r= Rate of interest in % and n= number of years.

The formula for Simple interest is I= P*n*r/ 100

In the given problem r= 5% and n=2 years. Substituting , we have

P* (1.05)^2 -P =328 or P*1.1025- P = 328

.1025 P = 328

Therefore P = 328/ 0.1025 = Rs 3200.

Now we can calculate simple interest using the value of P= 3200

Simple Interest I= 3200*2*5/100 = Rs 320