Question

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

Answer 1

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;

principal x rate × time

.. (1)

S.I. = 100 Now we put the values of variables as;

64000 × 10 × 2 • S.I. =

100

= 12800 Rupees

Also, we know that;

(1. A = P(1+ 100 = 64000 1 + = ...(2) 9.75 100 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.