Question

Calculate the difference between compound interest and simple interest on an amount of 7500 at 20% per annum for 2 years.​

Answer 1

Step-by-step explanation:

Given :-

Principle = Rs. 7500

Rate of interest = 20%

Time = 2 years

To find :-

Calculate the difference between compound interest and simple interest on an amount of 7500 at 20% per annum for 2 years.?

Solution :-

Method-1:-

Given that

Principle (P) = Rs. 7500

Rate of interest (R) = 20%

Time (T) = 2 years

Finding Simple Interest :-

We know that

Simple Interest = PTR/100

=> SI = (7500×2×20)/100

=> SI = 300000/100

=> SI = 3000

Simple Interest for 2 years = Rs. 3000

Finding Compound Interest :-

We know that

A = P[1+(R/100)]^n

=> A = 7500[1+(20/100)]²

=> A = 7500[1+(1/5)]²

=> A = 7500[(5+1)/5]²

=> A = 7500(6/5)²

=> A = 7500×(36/25)

=> A = 7500×36/25

=> A = 300×36

=> A = 10800

Amount for 2 years = Rs. 10800

Now,

Interest = Amount - Principle

=> Interest = 10800-7500

=> Interest = Rs. 3300

Compound Interest for 2 years

= Rs. 3300

Now,

The difference between the CI and SI

=> 3300-3000

=> Rs. 300

Method-2:-

If the Principle is P, Rate of Interest is R and D is the difference between CI and SI for 2 years is D = P(R/100)²

We have,

P = Rs. 7500, R = 20%

=> D = 7500(20/100)²

=> D = 7500(1/5)²

=> D = 7500×(1/25)

=> D = 7500/25

=> D = 300

The difference = Rs. 300

Answer:-

The difference between the Compound Interest and the Simple Interest for the given problem is Rs. 300

Used formulae:-

→ Simple Interest = PTR/100

→ A = P[1+(R/100)]^n

→ Interest = Amount - Principle

→ If the Principle is P, Rate of Interest is R and D is the difference between CI and SI for 2 years is

D = P(R/100)²

Answer 2

Answer:

8530.6

Step-by-step explanation:

Given

P=Rs.8500,R=6%,n=2 yrs

We know that amount A at the end of n years at the rate R % per annum when the interest is compounded annually is

A=P(1+

100

R

)

n

=8500(1+

100

6

)

2

=8500(

100

106

)

2

=

100

85×106

2

=0.85×106

2

=Rs. 9550.6

Also CI=A−P=9550.6−8500.0=Rs1050.6

We know that SI=

100

PRT

=

100

8500×6×2

=Rs1020

∴ Difference between CI and SI

CI−SI=9550.6−1020.0=Rs.8530.6