Question

A bank offers two rates of interest.One is 10% p.a. simple interest,while the other is 9.75% p.a. compounded annually.Which scheme will bring more interest on rupees 64000 invested for 2 years and by how much?

Answer 1

Compound interest will bring more interest on 64000 Rupees.

Step-by-step explanation:

Since, we are given an amount of money as Rs 64000.

We are given two rates and asked to find out the simple interest and compound interest.

Therefore, the given amount will be principal as 64000 rupees.

Now, we have two formulas as;

• S.I. = $\dfrac{principal \times rate \times time}{100}$........(1)

Now we put the values of variables as;

• S.I. = $\dfrac{64000 \times 10 \times 2}{100}$

              = 12800 Rupees

Also, we know that;

• A = $P\left ( 1 + \dfrac{r}{100} \right )^n$   .........(2)

            = $64000\left ( 1 + \dfrac{9.75}{100} \right )^2$

   By solving it, we get;

• A = 91776.4 Rupees

• Compound interest = A - P

•   C.I. = 91776.4 - 64000 = 27776.4 Rupees.

Thus, we can see that compound interest in greater than simple interest.

Answer 2

Answer:

P= 64000

R= 10%

I= P×R×T/100

= 64000×10×2/100

= 12800 Rs.

A= P+I

= 64000+ 12800

=76800

then..