The difference between simple interest and co | vedclass

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Question

(A) Let the principal sum be $P$.For $2$ years,the simple interest $(SI)$ is given by $SI = \frac{P 	imes R 	imes T}{100} = \frac{P 	imes 4 	imes

Vedclass · Accepted Answer

$625$

Vedclass · Answer

(A) Let the principal sum be $P$.For $2$ years,the simple interest $(SI)$ is given by $SI = \frac{P 	imes R 	imes T}{100} = \frac{P 	imes 4 	imes 2}{100} = \frac{8P}{100} = 0.08P$.The compound interest $(CI)$ compounded annually is given by $CI = P \left(1 + \frac{R}{100}ight)^T - P = P \left(1 + \frac{4}{100}ight)^2 - P = P \left(1.04^2 - 1ight) = P(1.0816 - 1) = 0.0816P$.The difference between $CI$ and $SI$ is given as ₹ $1$.$0.0816P - 0.08P = 1$$0.0016P = 1$$P = \frac{1}{0.0016} = \frac{10000}{16} = 625$.Thus,the sum is ₹ $625$.

The difference between simple interest and compound interest compounded annually on a certain sum of money for $2$ years at $4 \%$ per annum is ₹ $1$. The sum (in ₹) is

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