Priya borrowed a certain sum at the rate of 12% per annum. If she paid Rs 10176 at the end of 2 years as interest compounded annually. What was the sum she borrowed?
Answer & explanation
Correct answer: option 4
Formula used-
Amount = P$(1 \;+\; \frac{R}{100})^t$
Compound Interest = Amount - Principal
Here, Compound interest = Rs 10176, R = 12%, t = 2 years
10176 = P$(1 \;+\; \frac{12}{100})^2$ - P
⇒ 10176 = P[$(\frac{28}{25})^2 - 1$]
⇒ 10176 = P[$\frac{784}{625}$ - 1]
⇒ 10176 = P[$\frac{159}{625}$]
⇒ P = $\frac{10176 \times 625}{159}$
⇒ P = 40000
Thus, Sum borrowed is Rs 40000