Question

If at the same rate of interest, in 2 years, the simple interest is Rs. 40 and compound interest is Rs. 41, then what is the principal

Answer 1

Simple Interest for 1 year = 40/2 = 20

CI for 2 years = 20 + 20 + 1

The difference of Re 1 is due to the interest received on this interest.

Hence interest rate = 1/20 * 100 = 5

Interest for 1 year at 5% = 20

Hence principal = 20*100/5 = 400