Question

find simple interest and compound interest on principal amount of ₹ 5000 on rate of 10% p.a. for 2 years which is more
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Answer 1

Answer:

Rs. 1050

Step-by-step explanation:

simple Interest

P=5000

R•/•=10•/•

T=2years

SI=P*T*R/100=5000*10*2/100

SI=10000

compound interest

1st year

P=5000,T=1year,R•/•=10•/•

interest =5000*1*10/100 =500

Amount =5000+500=5500

2nd year

P=5500(Because the amount of first year becomes the principal of seconds year)

T=1year,R•/•=10•/•

interest =5500*1*10/100 =550

Amount =5500+550=6050

Compound interest =Final amount - original principal

Compound interest =6050-5000=Rs.1050

Answer 2

Given:

• Principal (P)= ₹ 5000
• Rate of Interest (R%) = 10% p.a.
• Time (T/n) = 2 years

To find:

Simple Interest (S.I) and Compound Interest (C.I) and find which is more.

So,

• The formula used to find the Simple Interest (S.I) is

Simple Interest(S.I) = (P*R*T)/100

Simple Interest(S.I) = (5000 * 10 * 2)/100

Simple Interest(S.I) = (100000)/100

∴ Simple Interest(S.I) = ₹ 1000

Now,

• The formula used to find the Compound Interest (C.I) is

Compound Interest (C.I) = P [ { 1 + (R/100) }ⁿ - 1]

Compound Interest (C.I) = 5000 [ { 1 + (10/100) }² - 1]

Compound Interest (C.I) = 5000 [ { 1 + (1/10) }² - 1]

Compound Interest (C.I) = 5000 [ { (10+1)/10 }² - 1]

Compound Interest (C.I) = 5000 [ ( 11/10)² - 1]

Compound Interest (C.I) = 5000 [ (121/100) - 1]

Compound Interest (C.I) = 5000 [ (121 - 100)/100 ]

Compound Interest (C.I) = 5000 * 21/100

Compound Interest (C.I) = 50 * 21

∴ Compound Interest (C.I) = ₹ 1050

Hence,

• Simple Interest(S.I) = ₹ 1000
• Compound Interest (C.I) = ₹ 1050

Now,

• Simple Interest(S.I) < Compound Interest (C.I)

So,

Compound Interest (C.I) is greater than Simple Interest(S.I) by ₹ 50

As, 1050 - 1000 = 50