Find the principle

The difference between the compound interest and the simple interest on a certain sum of money at 12% per annum for 2 years is Rs. 1800. Find the principle sum when the interest is compounded annually:

  1. Rs.120000
  2. Rs. 125000
  3. Rs. 128000
  4. None of these
Anurag Mishra Professor Asked on 24th January 2016 in Maths.
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1 Answer(s)

Answer: (2) Rs. 125000

Explanation:-
Let the sum be Rs. X

According to question,
{X (1 + 12/100)^2 – X} – 12 x 2 x X/100 = 1800
{X (1 + 3/25)^2 – X} – 3 x 2 x X/25 = 1800
{X (28/25)^2 – X} – 6 X/25 = 1800
(28 x 28 x X – 25 x 25 X)/25 x 25 – 6 X/25 = 1800
(784 – 625) X/625 – 6 X/25 = 1800
(159 X – 150) X/625 = 1800
9 X = 1800 x 625
X = 1800 x 625/9
X = 200 x 625
X = 125000

Then, sum will be Rs. 125000.

Hence, the correct answer is option (2) Rs. 125000.

Anurag Mishra Professor Answered on 28th January 2016.
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