Discussion

Question:

For the same principal amount, the compound interest for two years at 5% per annum exceeds the simple interest for three years at 3% per annum by Rs 1125. Then the principal amount in rupees is

Explanation:

Let the Principal be Rs. P.

Simple Interest for 3 years = $\frac{3 \times P \times 3}{100} = \frac{9 P}{100}$ = 0.09P

Compound Interest for 2 years = P × 1.05² – P = 0.1025P

∴ 0.1025P – 0.09P = 1125

⇒ 0.0125P = 1125

⇒ P = 90,000

Hence, 90000.

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