Shortcut Trick
The difference in the interest earned in three years on a certain sum P at R% p.a. (compounded annually and simple interest) = 1002PR2×(100R+3)
According to the question,
⇒ ₹197.12 = 1002P(8)2×(1008+3)
⇒ ₹197.12 = 1000064P×(100308)
⇒ P = ₹10,000
The principal invested is ₹10,000.
Alternate Method
Given:
A certain amount P is invested in scheme A for 3 years at a simple interest of 8% per annum.
The same amount P is invested in scheme B for 3 years at 8% per annum compounded annually.
The difference in the interest earned is ₹197.12.
Formula used:
(1) S.I = 100P×R×T
(2) C.I = P[(1 + 100R)T - 1]
Where,
P, is the principal invested
R, rate of interest applied
T, is the time of investment
S.I, is the simple interest earned
C.I, is the compound interest earned
Calculation:
Let P is the principal invested.
Let S.I is the simple interest earned.
Let C.I is the compound interest earned.
In the first case:
⇒ S.I = 100P×8×3 ----(1)
In the second case:
⇒ C.I = P[(1 + 1008)3 - 1]
⇒ C.I = P[(2527)3 - 1] ----(2)
According to the question,
⇒ C.I - S.I = P[(2527)3 - 1] - 100P×8×3
⇒ ₹197.12 = P[1562519683 - 1] - 100P×8×3
⇒ ₹197.12 = P[156254058] - 10024P
⇒ ₹197.12 = P[156254058−3750]
⇒ P = ₹10,000
∴ The principal invested is ₹10,000.