AFCAT Model Paper 6

Given:
Difference between the compound and the simple interest is Rs. 10
Rate = 5% and Time = 2 years
Formula Used:
Compound Interest =P[(1+

Rate

100

)Time−1]
Where, P = Principal
Simple Interest =

PRT

100

Calculation:
Let the sum of money be Rs. ‘P’
According to the question
CI – SI = 10
⇒P[(1+

Rate

100

)Time−1]−[

(P×Rate×Time)

100

]=10
⇒ P[(1+

5

100

)2)−1]−[

(P×5×2)

100

]=10
⇒ P[(1.05)2−1]−0.1P=10
⇒ 0.1025P – 0.1P = 10
⇒ 0.0025P = 10
⇒ P =

10

0.0025

=4000
∴ Required sum = Rs. 4000