The difference between compound interest, compounded annually, and simple interest for 3 years at a rate of 20% per annum is ₹256. What is the principal lent?
Answer & Solution
Correct option is B
Given:
Time period T = 3 years.
Rate of interest R = 20% per annum.
Difference between CI and SI = ₹256.
Formula Used:
For 3 years, the difference between compound interest and simple interest is:
where P is principal, R is rate, and D is difference.
Solution:
Substitute the given values D = 256 and R = 20 into the formula:
P = 16 × 125 = 2000.
Therefore, the principal lent is ₹2,000.
Final Answer
So the correct answer is (b)

