Question

Find the difference between Compound Interest and Simple Interest on Rs 4500 at 5% per annum for 3 years.

Answer 1

Solution

Principal(P) = ₹4500

Rate(R) = 5%

Time(n) = 3 years

Compound Interest (CI) = ?

Simple Interest (SI) = ?

Calculating Compound Interest

$\sf{A=P\bigg(1+ \dfrac{R}{100}\bigg)^n}$

$\sf{ = 4500 \bigg(1+\dfrac{5}{100} \bigg)^{3} }$

$\sf{ = 4500 \bigg( \dfrac{21}{20} \bigg)^{3}}$

$\sf{ = 4500\times\dfrac{9261}{8000}}$

$\sf{A=₹5,209.31(approx)}$

CI = A - P

CI = ₹5209.31 - 4500

CI = ₹709.31(approx)

Calculating Simple Interest

$\sf{SI= \dfrac{P \times R \times T}{100} }$

$\sf{ = \dfrac{4500 \times 5 \times 3}{100} }$

$\sf{SI \: =₹675.}$

Difference of Interests

• CI - SI = ₹709.31 - ₹675 = ₹34.31 (approx).

Therefore, difference of interests is ₹34.31.

Hence, solved!! ✓

Additional Information

A = P + SI

P = A - SI

SI = A - P

A = P(1 + R×T/100).