The difference between compound and simple interest on a sum for 2 years at 8% p.a. is Rs. 786. Find the sum:_________?
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Answer: C. Rs 120000
Explanation
The difference between compound and simple interest over two years equals the principal times the square of the rate. Substituting seven eighty-six for the difference and zero point zero eight for the eight percentage rate forms an equation. Solving the equation for the principal sum yields the correct calculated financial investment total. Two-year interest difference calculations rely on the squared percentage rate multiplied by the principal. Percentage rates expressed as decimals are squared to determine the proportional growth discrepancy. Isolating the principal variable requires careful decimal division and fraction simplification steps.
Auditors use interest difference formulas to verify accuracy in corporate loan accounting ledgers. Investment analysts calculate capital requirements based on expected compound and simple return gaps. Practicing multi-step interest problems builds robust mathematical reasoning and calculation skills. Option A underestimates the required principal sum by assuming a round baseline investment value. Option B proposes a principal sum too small to generate the specified interest difference amount. Option D overestimates the capital investment required to achieve the given interest discrepancy.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
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