The compound interest on a principal amount for 2 years at an annual rate of 12.5% is Rs. 510. What is the simple interest on the same principal at the same rate and for the same duration?

Explanation

Let the principal be Rs. P. Given that compound interest for 2 years at 12.5% per annum is Rs. 510, we have: P[(1 + 12.5/100)^2 - 1] = 510 This simplifies to: P[(9/8)^2 - 1] = 510 Calculating, we find the principal P = Rs. 1920. Now, the simple interest for 2 years is: SI = (P × rate × time) / 100 = (1920 × 12.5 × 2) / 100 = Rs. 480.