Multiple choice

The difference between C.I. and S.I. on a certain sum of money at 10% per annum for 3 years is Rs 620. Find the principal if it is known that the interest is compounded annually.

  1. 200000

  2. 20000

  3. 10000

  4. 100000

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The difference formula for 3 years at 10% is: CI - SI = P[(1 + r/100)³ - 1 - 3r/100] = 620. For P = 20000: CI - SI = 20000[(1.1)³ - 1 - 0.3] = 20000[1.331 - 1.3] = 20000 × 0.031 = 620. This matches the given difference.

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