The difference between Simple interest and compound interest at 20% per annum at the end of 3 years is Rs.1,024. What is the sum?

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Rs.6,000

Rs.5,000

Rs.8,000

Rs.9,000

answer is C.

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Detailed Solution

Concept- Simple interest and compound interest are distinct concepts. First, we need to find simple and compound interest using the difference between simple and compound interest. To solve this problem, you need to know the formulas for simple and compound interest.
The interest rate is stated as 20%

Using the concept of percentages, we can write the interest rate in fractional form as:

In addition, a period of 3 years is given t=3
Let the principal be P
In addition, the amount after simple interest is A
Then from the simple interest formula we can write

Let us substitute the value of r and t
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amount received after compounding is B
Then from the formula for compound interest we write:
Question Image

Now from 1 and 2
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Hence, the correct answer is option (3) .

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