Find the difference between compound interest and simple interest on 12,000 deposited for 2 years at 10% compounded half-yearly
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Step-by-step explanation:
Interest from simple interest = PRT/100
The formula for CI at annual compound interest, including principal sum, is:
Where:
CI = Compound Interest, P = Principal investment amount (the initial deposit or loan amount), r = Annual interest rate (decimal), n = The number of times that interest is compounded per year, t = The number of years the money is invested or borrowed for
SI = (12000 × 20 × 4)/100 = Rs. 9600
CI = [12000(1 + 20/100)4 - 12000] = Rs. 12883.20
∴ Difference in interest = 12883.20 - 9600 = Rs. 3283.20
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