compound interest

The difference between simple and compound interests compounded annually on a certain sum of money for 2 years at 4% per annum is Re. 1. What is the sum?



Answer

Let the sum be Rs. x. Then,

Compound Interest =		x		1 +	4		2	- x		=		676	x	- x		=	51	x.
					100							625					625

Simple Interest =		x x 4 x 2		=	2x	.
		100			25

	51x	-	2x	= 1
	625		25

 x = 625.