Arithmetic Ability
Compound Interest

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Q.

The difference between the simple interest on a certain sum at the rate of 10%per annum for 2 years and compound interest which is compounded every 6 months is Rs.124.05. what is the principal sum

View Answer

Correct choice: B

Explanation:

Compound Interest on P at 10% for 2 years when interest is compounded half-yearly =P(1+(R/2)/100/)2T−P=P(1+1/20)4−P=P(21/20)4−P Simple Interest on P at 10% for 2 years = PRT/100=P×10×2/100=P/5 Given that difference between compound interest and simple interest = 124.05 P*(21/20)4−P−P/5=124.05 =>P[(21/20)4−1−1/5]=124.05 P=8000
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