Question

On a sum of money if the difference between simple interest and compound interest, both at 10% , is ` 10 in two years. What is the principal amount​

Answer 1

Answer:

The principle amount is 1000

Step-by-step explanation:

Given : Rate of interest R= 10%

            Period T = 2 years

           Compound interest - simple interest = 10

           Principle amount P =?

Solution : Compound interest I₁ = P x (1+R/100)^T - P

                                                    = P x (1+10/100)^2 - P

                                                     = P x (1+0.1)^2 - P

                                                     = 1.21P - P

                                                     = 0.21P

               Simple interest I₂ = PTR/100

                                             = P x 2 x10/100

                                             = 0.2P

Compound interest - simple interest = 10

                    0.21P - 0.2P = 10

                                0.01P = 10

                                      P = 10/0.01

                                         = 1000

∴ The principle amount is 1000