Question : The difference between simple interest and compound interest on a certain amount at 9% per annum for two years is INR 162, what is the principal?
Option 1: INR 19700
Option 2: INR 19000
Option 3: INR 20000
Option 4: INR 19500
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Correct Answer: INR 20000
Solution :
Rate = 9%
The difference between the Simple Interest and the Compound Interest = INR 162
Time = 2 years
Let P be the principal.
Difference between the Simple Interest and the Compound Interest for 2 years = $P×(\frac{R}{100})^2$
⇒ $162 = P×(\frac{9}{100})^2$
$P = \frac{1620000}{81} = 20000$
Hence, the correct answer is INR 20000.
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