The difference between compound interest (compounded annually) and simple interest for 3 years at the rate of 20% per annum is ₹624. What is the principal lent?
₹4,875
For 3 years at rate r% per annum, CI - SI = P × [(1 + r/100)³ - 1 - 3r/100].
At r = 20%: (1.2)³ - 1 - 0.6 = 1.728 - 1.6 = 0.128.
So 0.128P = 624 ⟹ P = 624 ÷ 0.128 = ₹4,875.
Hence, the correct answer is ₹4,875.
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Important Questions from Simple and Compound Both
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The compound interest on a certain sum for 3 years at 8% per annum is Rs. 1,94,784. What is the simple interest on the $\frac{9}{10}$ part of the sum for the same time but at a rate of interest per annum which is $1\frac{1}{2}$ time the rate of interest per annum as applicable for compound interest?
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