The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Rs 1. Find the sum.
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Answer:
Rs. 625
Step-by-step explanation:
Let the sum be Rs. P
R = 4 %
T = 2 years
SI = (P×R×T) / 100 ⇒ (P×4×2) / 100 ⇒ 2P / 25
CI = P((1+R/100)² - 1) ⇒ P ((1+4/100)² -1) ⇒ P((1+1/25)²-1) ⇒ P((26/25)²-1)
⇒ P((676/625)-1) ⇒ P(51/625) ⇒ 51P/625
Now, CI - SI = 1
⇒ 51P/625 - 2P / 25 = 1
⇒ 51P - 50P/625 = 1
⇒P/625 = 1
∴ P = ₹ 625
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