The difference between the compound and simple interest on a certain sum for 2 years at the rate of 8% per annum is Rs.80,What is the sum?
A)11,880 B)12,500 C)13,250 D)14,270

• ANSWER : B Rs 12500
  
  SOLUTION :
  
  Since we know that SI and CI are same for first year. Difference is due to the SI of 1st year is treated as PRINCIPLE of 2nd year in CI.
  So 1st we calculate the amount which treated as P in CI
  P = 100*SI/R*T = 100*80/8*1 = 1000
  This amount is also the SI for 1 year.
  So
  SI = 1000
  T = 1 Year
  R = 8%
  P = 100*1000/8*1 = 12500
• 12 years agoHelpfull: Yes(2) No(4)
• Let the capital be P
  In simple interest , Interest for two years = P r n 100 = P x 8 x 2 / 100 = 16P/100
  = 0.16 P
  where r is the rate and n is the number of years
  In compound interest Capital + interest = P ( 1 + r/100 ) ^n = P ( 1 + 8/100 ) ^2
  = P x1.08^2
  = 1.1664 P
  Hence In compound interest Interest for two years = 1.1664 P - P = 0.1664 P.
  Difference of interest = Rs 80 = 0.1664 P - 0.16 P = 0.0064 P
  0.0064 P = 80
  P = 80 / 0.0064 = 12500
  Hence the capital is Rs 12,500
• 4 years agoHelpfull: Yes(0) No(0)