Question

If the difference between the compound interest and simple interest for 3 years at 10% per annum is Rs. 620. Find the principal amount.
1. Rs. 10,000​
2. Rs. 15,000
3. Rs. 20,000
4. Rs. 25,000
5. Rs. 30,000

Answer 1

Correct Answer - Option 3 : Rs. 20,000

Given:

Rate of Interest = 10%

Difference between Compound Interest and Simple Interest = Rs. 620

Formula used:

For 3 years,

C.I – S.I = P × (R/100)² × [3 + (R/100)]

Where, C.I = Compound Interest

S.I = Simple Interest

P = Principal

And R = Rate of Interest

Calculation:

Let the principal amount be Rs. P

Then, C.I – S.I = P × (R/100)² × [3 + (R/100)]

⇒ P × (10/100)² × [3 + (10/100)] = Rs. 620

⇒ P × (1/10)² × [3 + (1/10)] = 620

⇒ P × (1/100) × (31/10) = 620

⇒ P = 20,000

∴ The principal amount is Rs. 20,000.