Question

The difference between simple interest and compound interest for a certain sum for 2 years
is 1⁄400 of the principle amount, the rate of interest is:

Answer 1

Answer:

The difference between the simple interset and compound interest on a certain sum of money 'P' for 2 years at r% per annum is given by :

⇒(CI−SI)

2year

=

100

2

Pr

2

Using the above formula for a sum of money 'P' invested for two years at 4% p.a., given that the difference between CI&SI is Rs.20

∴20=

100

2

P(4)

2

⇒20=

100×100

P(4×4)

⇒5×25×100=P

⇒P=Rs.12500

Hence, the answer is Rs.12500.