Question

The difference between the compound interest and simple interest on a certain sum at 12% per annum for 2 years is 126.72. Find the sum.

• A. 8000
• B. 8800
• C. 10200
• D. 12400

Answer 1

The correct option is B 8800

Simple Interest $SI=\frac{PNR}{100}$
So, $SI=\frac{P\times 2\times 12}{100}=Rs0.24P$
When interest is compounded, Amount $A=P(1+\frac{R}{100}{)}^n$
So, Amount $=P\times (1+\frac{12}{100}{)}^2=P\times 1.12\times 1.12=Rs1.2544P$
$=>CI=A-P=Rs1.2544P-P=Rs0.2544P$
Given, difference $CI-SI=Rs126.72$
$=>0.2544P-0.24P=Rs126.72$
$=>0.0144P=Rs126.72$
$=>P=Rs8800$