 Hello and welcome to this session. In this session, we are going to discuss the following question and the question says that, Peter borrowed a sum of money and pays of $270 at the end of first year and $729 at the end of second year. If the rate of interest is 8% per annum, find the sum. We know that compound interest formula is amount A equal to P into 1 plus R upon 100 raise to power n. With this key idea, let us proceed with the solution. According to the question, we have to find the sum of money that Peter borrowed if he pays of $270 at the end of first year and $729 at the end of second year and the rate of interest given is 8% per annum. So now, let the required sum of money be P. The rate of interest equal to 8% per annum. Amount A is equal to P into 1 plus R upon 100 raise to power n. Therefore, after one year, amount is equal to P into 1 plus 8 upon 100 dollars which is equal to P into 100 plus 8 upon 100 dollars. That is equal to 108 upon 100 P which is equal to 27 upon 25 P dollars. Now, money paid at the end of first year is equal to $270. Therefore, the principle for second year is equal to 27 upon 25 P minus $270. So by using the compound interest formula, the amount at the end of second year is equal to 27 upon 25 P minus $270 into 1 plus 8 upon 100 dollars. That is equal to 27 upon 25 P minus $270 into 27 upon 25 dollars. Now again, the money paid at the end of second year is equal to $729. So this means that 27 upon 25 P minus $270 into 27 upon 25 is equal to 729. This implies 27 upon 25 P minus $270 is equal to 729 into 25 upon 27. Now, 27 into 27 is 729 implies 27 upon 25 P is equal to 27 into 25 plus $270. This implies 27 upon 25 P is equal to 675 plus $270. That is equal to 945. So P is equal to 945 into 25 upon 27. Now, as 27 into 35 is 945, this implies P is equal to 35 into 25 which is equal to 875. Hence, the sum borrowed by Peter is equal to $875 which is our answer. This completes our session. Hope you enjoyed the session.