On a certain sum of money, the difference between the compound interest for a year, payable half yearly, and the simple interest for a year is Rs. 56. If the rate of interest in both the cases is 16%, then the sum is ?

Answer: Option C

When the money is compounded half yearly the effective rate of interest for 6 months = $$\frac{16}{2}$$ = 8% = $$\frac{2}{25}$$
Let principal = (25)² = 625

⇒ 4 units → 56
⇒ 1 unit → 14
⇒ Principal = 14 × 625 = Rs. 8750