The difference between simple interest and compound interest compounded annually on a certain sum of money for 2 years at 4% per annum is Rs 1. What is the sum of rupees?

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Ram Mohan Arumilli

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If 'P' is the Principal Sum , then Compound Interest (CI) @4%, after 2 years is: CI = P{ (1+4/100) (1+4/100) -1} =P { 1+16/10000 +2*4/100 -1} = P{16/10000+2*4/100} Simple Interest SI, @ 4% after 2 years is: SI = P*2*4/100 It is given that, CI - SI= Rs.1, Substituting the values of CI and SI in the...
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If 'P' is the Principal Sum , then Compound Interest (CI) @4%, after 2 years is: CI=P{ (1+4/100) (1+4/100) -1} =P { 1+16/10000 +2*4/100 -1} = P{16/10000+2*4/100} Simple Interest SI, @ 4% after 2 years is: SI=P*2*4/100 It is given that, CI - SI=Rs.1, Substituting the values of CI and SI in the above eqn, we get: P{16/10000 + 2*4/100} - P*2*4/100 =1, ==> P*16/10000 = 1, ==> P=10000/16, ==> p= 625 Therefore, the principal Sum lent was, Rs.625/- One Can use the Formula P*(r/100)*(r/100) = d , where, 'P' is Principal Sum, 'r' is rate of interest for a prescribed period, and 'd' is the difference between CI and SI, for two such periods; can be used in this case. read less
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Given, Compound Interest -Simple Interest = 1 P { 1+ ( 4/100) } ^ 2 - P - ( P×4×2 / 100 ) = 1 On solving, P = 625
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