Question

find the difference between compound interest and simple interest on 5000 rupees for 2 years at 10% per annum compounded annually​

Answer 1

☘️ Solution :

• Present value = ₹ 5000
• Interest rate = 10% per annum
• Time = 2 years

Simple interest (S.I) :

⇒ Simple interest = P x R x T/100

⇒ S.I = 5000 x 10 x 2/ 100

= 500 x 2

= Rs. 1000

Compound interest (C.I) :

⇒ C.I = P [(1+r/100)^t - 1]

⇒ C.I = 5000[ (1+10/100)² - 1]

⇒ C.I = 5000[(1+1/10)² - 1]

⇒ C.I = 5000[(11/10)² - 1]

⇒ C.I = 5000[121/100 - 1]

⇒ C.I = 5000[121 - 100/100]

⇒ C.I = 5000(21/100)

⇒ C.I = 5000 x 21/100

= 50 x 21

= Rs. 1050

∴ The difference between compound interest and simple interest is

= C.I - S.I

= 1050 - 1000

= Rs. 50

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☘️ Answer :

• Rs. 50 is your answer.