If at same rate of interest, in 2 years, the simple interest is ₹40 and compound interest is ₹44, then what is the principal (in ₹)?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 100.
SI = ₹40, CI = ₹44 → Difference = ₹4
For 2 years: CI - SI = (P × R²) / 100² = 4 — (1)
SI = (P × R × 2) / 100 = 40 → P × R = 2000 — (2)
From (1) and (2):
(P × R²) / 10000 = 4
Substitute R = 2000 / P into it:
P × (2000/P)² / 10000 = 4
(4,000,000 / P) / 10000 = 4
400 / P = 4 → P = 100