The difference between compound interest compounded annually and simple interest on a certain sum at a rate of 15% per annum for 2 years is Rs 1,944. Find the compound interest compounded annually on the same sum for the same period at a rate of 10% per annum.
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. 18144
Given:
The difference between compound interest compounded annually and simple interest on a certain sum at a rate of 15% per annum for 2 years is Rs 1,944
Formula used:
SI = PRT/100
A = P + SI
A = P(1 + R/100)T ----- (2)
Where, P = principal, R = rate of interest, T = time period, A = Amount and SI = Simple interest
Calculations:
Let the Principal be x
Using equation (2), we get
x(1 + 15/100)2 - x = (x × 15 × 2) + 1944
⇒ 0.0225x = 1944
⇒ x = 1944/0.0225 = 86400
Now the compound interest when rate is 10% in same time
⇒ 86400(1 + 10/100)2 - 86400
⇒ 18144