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The difference between the simple interest on a certain sum at the rate of 10%per annum for 2 years and compound interest which is compounded every 6 months is Rs.124.05. what is the principal sum

Correct Answer: Rs.8000

Explanation:

Compound Interest on P at 10% for 2 years when interest is compounded half-yearly


 


= P 1 + R 2 100 2 T - P = P 1 + 1 20 4 - P = P 21 20 4 - P


 


Simple Interest on P at 10% for 2 years =  P R T 100 = P × 10 × 2 100 = P 5


 


Given that difference between compound interest and simple interest = 124.05


  P * 21 20 4 - P - P 5 = 124 . 05


 


=> P 21 20 4 - 1 - 1 5 = 124 . 05


 P=8000


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