Multiple choice

A sum of money is invested at a rate of 12% per annum. The interest is compounded annually. The difference between the compound interest and simple interest earned over 2 years is Rs. 144. What is the principal (initial sum) invested?

  1. Rs. 8,000

  2. Rs. 9,000

  3. Rs. 10,000

  4. Rs. 12,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Difference between CI and SI for 2 years is P * (r/100)^2. 144 = P * (12/100)^2. 144 = P * (0.12)^2. 144 = P * 0.0144. P = 144 / 0.0144 = 10000.

AI explanation

For a period of two years, the difference between compound interest and simple interest is found using the formula Principal times Rate squared divided by 10000. We are given this difference is Rs. 144 and the rate is 12 percent. Substituting these values gives Principal times 144 divided by 10000 equals 144. Solving for the principal gives 14400 divided by 144, which equals Rs. 10,000.

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