Question

A certain sum of money earns a simple interest of ₹ 800 over 2-year period. The same sum of money invested at the same rate of interest and same period on a compound interest basis earns an interest of ₹ 900. What is the sum?

Accepted Answer

B. Simple interest per year = $\frac{800}{2} = 400$. Difference between CI and SI for 2 years = $900 - 800 = 100$. This ₹100 is the interest on ₹400 for 1 year. Rate $r = \frac{100}{400} 	imes 100 = 25\%$. Since $SI = \frac{P 	imes r 	imes t}{100} \Rightarrow 800 = \frac{P 	imes 25 	imes 2}{100} \Rightarrow P = 1600$.

Simple vs Compound Interest Sum Calculation

Explanation

Practise this under exam conditions