The difference between simple and compound rate of interest on a certain sum of money for 2 years at 20% rate of interest is ₹200. The amount is:
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 20% per annum in 2 years = Rs. 200
⇒ 200 = $\frac{P20^2}{100^2}$
⇒ 200 = P x \(\frac{1}{25}\)
⇒ P = 5000
So, Amount is Rs.5000