If the difference between the compound interest compounded yearly and the simple interest for 2 years at an annual rate of 20% is Rs.144, what is the principal amount?

Explanation

The difference between compound interest (compounded annually) and simple interest for 2 years at 20% per annum is given as Rs.144. Using the formula for the difference, which is P × (r/100)^2, we get P × (20/100)^2 = 144, leading to P × 0.04 = 144. Solving for P gives Rs.3600 as the principal amount.