Question

Find the difference between Compound Interest and Simple Interest on Rs. 4000 for
1 year at 10% p.a., if the interest is compounded half-yearly.​

Answer 1

The formulas are as follows:

Simple interest = Principle × rate/100 × time

Compound interest = Principle × (1 + i)ⁿ - Principle

Since the compounding is done semiannually the n or rather the time in both cases will be given by :  2n

Simple interest = 4000 × 10/100 × 2 = 80

Compound interest:  4000(1.10)² - 4000  = 4840 - 4000 = 840

The difference is therefore given by :

840 - 80 = 760

The answer is therefore :

= Rs 760

Answer 2

Answer:

Difference = 0, since it is only for one year.

Step-by-step explanation:

P = 4000

T = 1 Y

R = 10%

Simple interest = A = PNR/100

A = 4000x1x10/100 = 400

Compound Interest = A = P(R/100)

A = 4000(10/100)= 400