Question

Find the difference between CI and SI on sum of 4800 for 2 years at 5% per annum payable yearly.

can u simplify the calculation part for CI in detail

Answer 1

It is given that

Principal (P) = 4800

Rate of interest (r) = 5% p.a.

Period (n) = 2 years

We know that

SI = Prt/100

Substituting the values

=(4800×5×2)/100

= 480

If compounded yearly

A= P(1+r/100)

n

Substituting the values

=4800(1+5/100)

2

By further calculation

=4800×21/20×21/20

= 5292

Here

CI = A - P

Substituting the values

= 5292 - 4800

= 492

So the difference between CI and SI = 492 - 480 = 12