The difference between SI and CI for 2 years at the same rate of 20% per annum is Rs 8. What is the principal, if in CI, principal compounded annually?
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Step-by-step explanation:
Let the principal be 100
Simple interest=PNR/100=100*2*20/100=Rs 40
Compound interest= {A = P(1+R/100)^N}-P={100(1+20/100)^2}-100=100*1.2*1.2–100=144–100=Rs 44
(where P=principle,N=period and R =rate of interest)
When the difference between SI and CI is 44–40=Rs 4, the principal=100
When the difference between SI and CI is Rs 8, the principal=100/4*8=Rs 200
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