9. A bank offers two rates of interest. One is 10% p.a. simple interest, while the other 9.75% p.a. compounded annually. Which scheme will bring more interest on 264,0 invested for 2 years and by how much?
Answers
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Correct Question:
A bank offers two rates of interest. One is 10% p.a. simple interest, while the other 9.75% p.a. compounded annually. Which scheme will bring more interest on ₹64,000 invested for 2 years and by how much?
Step-by-step explanation:
Given that a bank offers two rates of interest. One is 10% p.a. simple interest, while the other 9.75% p.a. compounded annually.
We need to find out that which scheme will bring more interest on ₹64,000 invested for 2 years and by how much.
SI = (P × R × T)/100
where P = ₹65000, R = 10%, T = 2 years
Substitute the values,
SI = (64000 × 10 × 2)/100
SI = (6400 × 2)
SI = 12800
Now,
A = P (1 + R)^T
Substitute the values,
A = 64000 (1 + 9.75/100)² [Given R = 9?75%]
A = 64000 (1909.75/100)²
A = 64000(1.0975)²
A = 64000 × 1.2045
A = 77088
Interest = Amount - Principal
= 77088 - 64000
= 13088
Difference in interesst = Interest - Simple interest
= 13088 - 12800
= 288