The difference between the compound interest (compounded annually) and the simple interest on a sum for 3 years at 20% per annum is ₹1,536. What is the sum?

Explanation

1. 01

   CI − SI = $P\left(\frac{20}{100}\right)^2\left(3 + \frac{20}{100}\right) = P \times 0.04 \times 3.2 = 0.128P$.

2. 02

   $0.128P = 1536$, so $P = \frac{1536}{0.128} = 12000$.

3. 03

   The sum is ₹12,000.