Multiple choice

Find the principal, if the difference between the simple interest and the compound interest is Rs.120 at the end of the 2 years at the rate of interest 20% per annum.

  1. 4500

  2. 4000

  3. 3500

  4. 3000

  5. None
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D Correct answer
Explanation

For 2 years, the difference between CI and SI is P * (r/100)^2. Given 120 = P * (20/100)^2 = P * (0.2)^2 = P * 0.04. P = 120 / 0.04 = 3000.

AI explanation

Using the formula for the difference between compound interest and simple interest for two years, which is Principal multiplied by Rate squared divided by 10000, we substitute the given values. This gives 120 equals Principal multiplied by 20 squared divided by 10000, simplifying to 120 equals Principal multiplied by 400 divided by 10000. Solving for the principal yields 120 multiplied by 25, which is 3000.

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