If at same rate of interest, in 2 years, the simple interest is ₹40 and compound interest is ₹65, then what is the principal (in ₹)?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 16.
SI = ₹40, CI = ₹65, Time = 2 years
CI − SI = ₹25 → Interest on 1st year's interest
1st year SI = ₹20 (since SI for 2 years = ₹40)
Rate = (25/20)×100 = 125%
40 = (P × 125 × 2)/100
⇒ P = 40×100 / 250 = ₹16