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The difference between simple interest and compound interest on a certain sum of money for 2 years at 8% per annum is ₹120. Find the sum.

1. ₹19,750
2. ₹17,570
3. ₹21,570
4. ₹18,750

Correct answer: ₹18,750

Solution

For 2 years, the difference between compound interest and simple interest is \(P\left(\frac{r}{100}\right)^2\). Given difference = 120 and rate = 8%, we get \(120 = P\times(0.08)^2 = P\times0.0064\). Solving gives \(P = 18750\).

Related IBPS PO General Awareness questions

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