Question : The difference between simple interest and compound interest on a certain sum of money in 2 years at 3% per annum is 90 paise. What is the sum?
Option 1: Rs. 9000
Option 2: Rs. 5000
Option 3: Rs. 3000
Option 4: Rs. 1000
Correct Answer: Rs. 1000
Solution :
Let the principal be $p$.
Rate, $r$ = 3%
Time = 2 years
Difference between Simple interest and compound interest $=P(\frac{r}{100})^2$
⇒ $90 = p(\frac{3}{100})^2$
⇒ $90=p×\frac{9}{10000}$
$\therefore p=100000$ paise = Rs.1000
Hence, the correct answer is Rs.1000.
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