The difference between the simple interest and compound interest (interest is compounded half yearly) on a sum at the rate of 25% per annum for one year is ₹ 4375. What will be the principal?

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SSC GD Previous Paper 16 (Held On: 18 Feb 2019 Shift 2)
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  1. ₹ 280000
  2. ₹ 85000
  3. ₹ 80000
  4. ₹ 75000

Answer (Detailed Solution Below)

Option 1 : ₹ 280000
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Detailed Solution

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Given:

The difference between the simple interest and compound interest (interest is compounded half yearly) on a sum at the rate of 25% per annum for one year is ₹ 4375

Formula used:

Simple Interest = (P × N × R)/100

Compound Interest = [P(1 + (r/200))T] - P      (for compounded half yearly)

Calculation:

Let P be the Principal,

S.I = (P × 1 × 25)/100 = P/4

C.I = [P(1 + (25/200))2] - P        ( T = 2   ∵ compounded half yearly for 1 year)

⇒ C.I = 17P/64

Now, C.I - S.I = (17P/64) - (P/4) = P/64

⇒ P/64 = 4375

∴ P = 64 × 4375 = 280000

Shortcut TrickFormula used:

CI - SI = P(R/100)2

Rate (R) = 25%/2 due to the compounded half-yearly.

⇒ 4375 = P (25/200)2

⇒ P = 4375 × 64

⇒ P = 280,000

∴ The sum is Rs. 280,000.

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