The simple interest on a certain sum of money for 2 years at 7% per annum is double the compound interest on ₹1,000 for 2 years at 10% per annum, compounded annually. What is the sum placed on simple interest?
Answer & explanation
Correct answer: option 3
With Compound interest,
Amount = Principal × ( 1 + \(\frac{R}{100 }\))t
= 1000 × ( 1 + \(\frac{10 }{100 }\))²
= 1000 × \(\frac{11 }{10 }\) × \(\frac{11 }{10 }\)
= 1210
Amount = Principal + Compound Interest
Compound Interest = 1210 - 1000 = 210
Simple Interest = 2 × Compound Interest
= 2 × 210
= 420
Now , Simple Interest = \(\frac{Principal ×Rate × Time }{100}\)
420 = \(\frac{Principal × 7 × 2 }{100}\)
Principal = Rs. 3000