The difference between compound interest and simple interest is ₹228 for a certain sum of money at 8% per annum for 1.5 years, while compound interest is compounded half-yearly and simple interest is computed yearly. What is the sum?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is Option 4 i.e. Rs. 46,875
CI compounded half-yearly
Rate = 8/2 = 4%
Time = 1.5 × 2 = 3 years
CI for 3 years = P (263 - 253)/253 = 1951 P/15625
and Simple interest for 1 year at 8% per annum = P × 8 ×1/100 = 8P/100 = 2P/25
Now, the difference between CI and SI = 228 Rs
1951P/15625 - 2P/25 = 228
1943P - 1875P = 228 × 15625
P = 3 ×15625 = 46875 Rs
Hence, Principal amount = 46875 Rs