Discussion
On a certain sum, the difference between compound interest and simple interest at 10% p.a. for 2 years is ₹ 126. Find the sum. (in ₹).
Answer: B
The sum is ₹ 12,600.
For 2 years, the difference between compound and simple interest is the interest on the first year's interest:
\[ \begin{aligned} CI - SI &= P \left(\tfrac{R}{100}\right)^{2} \\ 126 &= P \times 0.01 \\ P &= 12600 \end{aligned} \]
Check: on ₹ 12,600 at 10%, simple interest for 2 years is ₹ 2,520 and compound interest is ₹ 2,646, a difference of ₹ 126.
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