Question

The difference between the compound interest and simple interest on a certain sum of money at 10% per annum for 2 years is ₹500. Find the sum when the interest is compounded annually.

• A. ₹65,000
• B. ₹55,000
• C. ₹40,000
• D. ₹50,000

Answer 1

The correct option is D ₹50,000

Let $P$ be the principal.
According to question, $C.I.–S.I.=₹500$
$\Rightarrow \left[P\right(1+\frac{r}{100}{)}^2-P]-[\frac{P\times 10\times 2}{100}]=500$
$\Rightarrow \frac{21P}{100}-\frac{P}{5}=500$
$\Rightarrow \frac{P}{100}=500$
$\Rightarrow P=500\times 100=₹50,000$