Question:
Find the principal if the interest compounded annually at the rate of 10% for two years is Rs 210.
Solution:
Let the sum be Rs $\mathrm{x}$.
We know that:
$\mathrm{CI}=\mathrm{A}-\mathrm{P}$
$=\mathrm{P}\left(1+\frac{\mathrm{R}}{100}\right)^{\mathrm{n}}-\mathrm{P}$
$=\mathrm{P}\left[\left(1+\frac{\mathrm{R}}{100}\right)^{\mathrm{n}}-1\right]$
$210=\mathrm{x}\left[\left(1+\frac{10}{100}\right)^{2}-1\right]$
$210=\mathrm{x}\left[(1.10)^{2}-1\right]$
$\mathrm{x}=\frac{210}{0.21}$
$=1,000$
Thus, the required sum is Rs 1,000 .