Find the principal, if the difference between compound and simple interest on a certain sum of money is Rs.360 at 6% per annum for 2 years.
1. Rs.1,00,000
2. Rs 2,00,000
3. Rs.35,000
4. Rs.40,000
1. Rs.1,00,000
2. Rs 2,00,000
3. Rs.35,000
4. Rs.40,000
Correct Answer – Option 1 : Rs.1,00,000
Given
Compound interest – Simple interest = 360
Formula used
If the difference between the compound and simple interest is given and rate of interest is given, then formula for calculating principal is as follows:
C.I – S.I = P(R/100)2
P, R and T are principal and rate.
Calculation
360 = P(6/100)2
(360 × 100 × 100)/(6 × 6) = P
P = Rs.1,00,000
∴ The principal is Rs.1,00,000.