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Question

The difference between simple interest and compound interest on a certain sum of money for 2 years at 4% per annum is Rs 20. Find the sum.

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Solution

The difference between the simple interset and compound interest on a certain sum of money 'P' for 2 years at r% per annum is given by :
(CISI)2year=Pr21002
Using the above formula for a sum of money 'P' invested for two years at 4% p.a., given that the difference between CI&SI is Rs.20
20=P(4)21002
20=P(4×4)100×100
5×25×100=P
P=Rs.12500
Hence, the answer is Rs.12500.


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