Question

The difference between SI and CI for fifth year is $6400$ at $20$% pa. What is going to be principal sum?

• A. $29800$
• B. $29806$
• C. $29802$
• D. None

Answer 1

The correct option is B $29806$

Difference between CI and SI for nth year
$=\left[\frac{P\times r}{100}\right]\times [1+{\left(\frac{r}{100}\right)}^{n-1}-1]$
$6400=\frac{20P}{100}\times [1+{\left(\frac{20}{100}\right)}^4-1]$
$6400=\frac{20P}{100}\times [{\left(1.2\right)}^4-1]$
$\frac{6400\times 100}{20\times 1.0736}=P=29806$