The difference between the compound interest and the simple interest on a certain sum of money at 10% per annum for 2 years is ₹200. What is the sum of money, if in the case of compound interest, interest is compounded annually?
Answer & explanation
Correct answer: option 4
The formula used here is,
Difference in the simple interest and compound interest on a certain sum at R% per annum in 2 years = (CI - SI) = $\frac{PR^2}{100^2}$
⇒ Difference in the simple interest and compound interest on a certain sum at 10% per annum in 2 years = Rs. 200
⇒ 200 = $\frac{P10^2}{100^2}$
⇒ P = 20000