Accountancy, asked by rockysk8227, 1 year ago

Find the difference between compound interest and simple interest on rs 4000 for 1 yr at 10%p.A if the interest is componunded half yearly

Answers

Answered by santy2
6

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

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