If the simple interest on certain sum of money be Rs. 40 for 2 years and the compound interest on the same sum at the same rate and for the same time be Rs. 45. What is the principle?
Correct Answer: Rs. 80
Explanation:
S.I. for 2 year = Rs. 40
S.I. for 1 year = Rs. 20
Rate = {(C.I. for 2 year - S.I. for 2 year) / (S.I. for 1 year)} x 100
= {(45 - 40) / 20} x 100 = 25% ∴ Principal = (S.I. x 100)/(Rate x Time)
= (40 x 100)/(25 x 2)
= Rs. 80
