Question : A certain sum was invested at the rate of 10% for 2 years at Compound interest and compounded annually. The same sum was invested for the same period and the same rate of interest at Simple interest. If the difference between Compound interest and Simple interest was Rs. 200 find the sum.
Option 1: Rs. 30,000
Option 2: Rs. 25,000
Option 3: Rs. 22,000
Option 4: Rs. 20,000
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Correct Answer: Rs. 20,000
Solution :
Solve by using the formula for 2 years: $D=\frac{PR^{2}}{10000}$ where $D$ = Difference between CI and SI, $P$ = Principal, $R$ = Rate of interest.
So, $200=\frac{P(10)^{2}}{10000}$
$\therefore P = 20000$
Hence, the correct answer is Rs. 20,000.
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