Question

The difference between the compound interest and simple interest for two years on a certain sum at a certain rate of interest is Rs. 64. The compound interest for two years is Rs. 704. The principal is

Accepted Answer

B. Given $CI_2 - SI_2 = 64$ and $CI_2 = 704$. So $SI_2 = 704 - 64 = 640$. Simple interest for 1 year = $\frac{640}{2} = 320$. The difference of Rs. 64 is the interest on 1 year's simple interest. So $\frac{R}{100} 	imes 320 = 64 \implies R = 20\%$. Principal $P = \frac{SI_1 	imes 100}{R} = \frac{320 	imes 100}{20} = 1600$.

Compound Interest and Simple Interest Difference

Explanation

Practise this under exam conditions