Simple interest and compound interest (compounding annually) on a principal at…

To find the principal amount, we can use the specific relationship between Simple Interest (SI) and Compound Interest (CI) for a period of 2 years.

Step-by-Step Calculation
Understand the difference:

SI for 2 years = 28,800

CI for 2 years = 36,000

The difference between CI and SI for 2 years is the interest earned on the first year's interest.

Difference = 36,000 - 28,800 = 7,200

Calculate the Interest Rate (R):

SI for 2 years is 28,800, so SI for 1 year = 28,800 / 2 = 14,400.

The difference of 7,200 is essentially the interest on the first year's SI (14,400).

Rate (R) = (Difference / SI for 1 year) × 100

R = (7,200 / 14,400) × 100 = 50%

Calculate the Principal (P):

Use the Simple Interest formula: SI = (P × R × T) / 100

28,800 = (P × 50 × 2) / 100

28,800 = (P × 100) / 100

P = 28,800