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Question : The difference between simple interest and compound interest (compounding of interest is done annually) on a certain sum of money for 3 years at the rate of 20 percent per annum is Rs. 192. What is the sum?

Option 1: Rs 1500

Option 2: Rs 1400

Option 3: Rs 1000

Option 4: Rs 1200


Team Careers360 3rd Jan, 2024
Answer (1)
Team Careers360 21st Jan, 2024

Correct Answer: Rs 1500


Solution : Simple interest (SI): SI = $\frac{P×R×T}{100}$
Compound interest (CI): CI = {P$(1+\frac{R}{100}​)^T$ − P] where
P = Principal, R = Rate, T = Time
According to question
CI − SI =192
⇒ P$(1+\frac{R}{100}​)^T$ − P − $\frac{P×R×T}{100}$ = 192
⇒ P$(1+\frac{20}{100}​)^3$ − P − $\frac{P × 20× 3​}{100}$ = 192
⇒ P$(1+\frac{1}{5}​)^3$ − P − $\frac{3P​}{5}$ = 192
⇒ $\frac{216P – 125P – 75P}{125}$ = 192
⇒ $\frac{16P}{125}$ = 192
⇒ P = $\frac{192 × 125}{16}$ = 1500
Hence, the correct answer is Rs.1500.

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