Question

The difference between simple and compound interest compounded annually on a certain sum of money for 2 years at 4% per annum is Rupee 1. Find the principal.

Answer 1

SI - CI = Rs. 1

P = Rs.?

n = 2 years

r = 4%

Difference between simple interest and compound interest for 2 years

$= p( { \frac{r}{100} )}^{2}$

$1000 = p \times {( \frac{4}{100} })^{2}$

$p = rs.625000$

Answer 2

$\bf{ : \implies SI - CI = Rs. 1} \\ \bf{ : \implies P = Rs.?} \\ \bf{ : \implies n = 2 years} \\ \bf{ : \implies r = 4 \%} \\ \bf{ : \implies Difference  \: between  \: simple \:  interest \:  and}  \\ \bf{ \: compound \:  interest  \: for  \: 2 \:  years}$

$\bf{ : \implies p = (\frac{r}{100} )^{2}} \\\bf{ : \implies 1000 = p \times (\frac{4}{100} )^{2}} \\ \bf{ : \implies p = rs \: 625000}$

$\large \sf \red{ \therefore the \: principal \: is \: 625000}$