Question

When difference between compound and simple interest for three years is INR 244 at 5% interest per annum, the principal is INR __________.

• A. 31425
• B. 33200
• C. 32000
• D. 32420

Answer 1

Answer:

C. 32000

For 3 years, the difference between Compound Interest (CI) and Simple Interest (SI) is:

$\text{Difference} = P\left(3r^2 + r^3\right)$

where
( r = 5% = 0.05 )

Compute (3r^2 + r^3)

$3(0.05)^2 + (0.05)^3$
$= 3(0.0025) + 0.000125$
$= 0.0075 + 0.000125$
$= 0.007625$

Substitute given values

$244 = P \times 0.007625$

$P = \frac{244}{0.007625}$
$P = 32000$