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

GivenCompound interest – Simple interest = 360

FormulausedIf 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.

Calculation360 = P(6/100)

^{2}(360 × 100 × 100)/(6 × 6) = P

P = Rs.1,00,000

∴ The principal is Rs.1,00,000.