Question

7. Which investment is better and by how much?
(i) 12000 at 6% p.a. simple interest for 2 years.
ii) 12000 at 6% p.a. compound interest for 2 years.​

Answer 1

Answer:

12000 at 6% p.a. compound interest for 2 years. is better by 43.2

Step-by-step explanation:

i) 12000 at 6% p.a. simple interest for 2 years

SI= PRT/100

  =(12000*6*2)/ 100 =1440

therefore SI= 1440

ii) 12000 at 6% p.a. compound interest for 2 years

A= P( 1+ r/100)^n

A= 12000( 1+ 6/100 )^2

  = 12000*106/100*106/100

   =13483.2

therefore CI=A-P

        CI =13483.2 - 12000= 1483.2

CI - SI = 1483.2 - 1440 = 43.2

hence option (ii) is better by 43.2