Multiple choice

A sum of money with compound interest becomes Rs. 2400 in one year and Rs. 3000 in two years. Find out the principal amount.

  1. Rs. 1900

  2. Rs. 1910

  3. Rs. 1915

  4. Rs. 1920
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Let P be the principal and r be the rate. P(1+r) = 2400 and P(1+r)^2 = 3000. Dividing the second by the first: 1+r = 3000/2400 = 1.25. P = 2400 / 1.25 = 1920.

AI explanation

The interest earned during the second year is the difference between the amount after two years and the amount after one year, which is 3000 - 2400 = Rs. 600. This Rs. 600 represents the interest generated by the first year's amount of Rs. 2400 over one year. Using the formula for the previous year's principal, P = (Amount * 100) / (100 + Rate), we find the rate is (600 / 2400) * 100 = 25%. Applying this rate to the first year, the original principal is (2400 * 100) / (100 + 25) = Rs. 1920.

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