Compound Interest Financial Maths: money earning 2.5% interest/year. 2nd yr earns 120 Euros more than 1st yr. How much is invested?

[reggiwilliams]

In the course of revising financial maths came across this question which took me longer than usual to get to answer
I attach question and my answer but can’t help thinking I could have not only done it differently but also explained it better but not entirely sure.
Any guidance would be appreciated

 

[blamocur]

You final answer looks good to me, but I find it difficult to read your intermediate calculations. Here is how I'd write it up, which is a matter of style, not of substance:

• Interest earned in the first year [imath]I_0 = Pr[/imath]
• Interest earned in the second year [imath]I_1 = P(1+r)r[/imath]
• Difference: [imath]D = I_1-I_0 = Pr^2[/imath]
• Principal : [imath]P = \frac{D}{r^2} = \frac{120}{0.025^2} = 192000[/imath]