The Banking Problem
Level
pending
The difference between compound interest and simple interest for 3 years @ 20% p.a is Rs152 . What is the principal lent in each case ?
The answer is 1187.50.
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1 solution
Say x= principal. With compound interest at 20% for 3 years, the total interest is x(1+0.2)^3 - x ( minus the principal since we are only interested in the total interest after 3 years) Without compound, the total interest after 3 years is 3*(0.2x)
We are told that the difference is 152. Therefore, (x(1.2)^3-x) - 0.6x= 15. x=1187.5 dollars