Multiple choice

In 3 years, the difference between the simple and the compound interest on the same principal amount @ 20% per annum is rupees 48. Find the principal.

  1. 650

  2. 300

  3. 375

  4. 400

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

For 3 years, the difference between CI and SI is P[(1+r/100)³-1] - P×r×3/100. At 20%, this equals P[(1.2)³-1-0.6] = P[1.728-1-0.6] = P(0.128). Setting 0.128P = 48 gives P = 48/0.128 = 375. The formula for 3 years is CI-SI = P×r²×(300+r)/(100)³.

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