Question

the difference between the compound interest, compounded annually and the simple interest on a certain sum for 2 years at 4 per annum is 20. Find the sum​

Answer 1

Answer:

12,500

Step-by-step explanation:

Given the difference between compound interest and simple interest is 20

Principle = 'p'

Time = 2 yrs

Rate of interest = 4%

Difference  = 20

$P[(1 + i)^n-1] - p * i * t = 20$

$P[(1 + 0.04)^2-1] - p * 0.04 * 2 = 20$

$P[(1.04)^2-1] - 0.08p = 20$

$0.0816p - 0.08p = 20$

$0.0016p = 20$

$P = \frac{20}{0.0016}$

P = 12,500

Hence the sum is 12,500