Question

Find the difference between Compound Interest and Simple Interest on Rs 45,000 at 12% per annum for 5 years.​

Answer 1

Given :-

• Principal = P = Rs.45,000
• Rate = R = 12% per annum.
• Time = T = 5 years.

To Find :-

• The difference between Compound Interest and Simple Interest = CI - SI = ?

Solution :-

we know that, when rate is annually ,

• SI = (P * R * T)/100
• CI = P[{1 + (R/100)}^T - 1]

so,

→ CI - SI = P[{1 + (R/100)}^T - 1] - (P * R * T)/100

putting all given values we get,

→ CI - SI = 45000[{1 + (12/100)}⁵ - 1] - (45000 * 12 * 5)/100

→ CI - SI = 45000[{1 + (3/25)}⁵ - 1] - 450 * 60

→ CI - SI = 45000[(28/25)⁵ - 1] - 27000

→ CI - SI = 45000[1.76234 - 1] - 27000

→ CI - SI = 45000 * 0.76234 - 27000

→ CI - SI = 34305.3 - 27000

→ CI - SI = Rs.7305.3 (Ans.)

Hence, the difference between Compound Interest and Simple Interest for 5 years is Rs.7305.3 .

Learn more :-

CI in 2yr is Rs. 1600 and in 3 yrs it will be Rs. 1700. Find the rate of interest.

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