Find the difference between compound interest compounded semi-annually and
simple interest on Rs 8,000 at 10 % per annum in 12 years.
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Answer:
is given that
Principal (P) = 8000
Rate = 10% p.a. or 5% half-yearly
Period = 1
2
1
years or 3 half years
Case 1 - When compounded annually
A = P(1+r/100)
n
Substituting the values
=8000(1+10/100)(1+5/100)
By further calculation
=8000×11/10×21/20
= 9240
We know that
CI = A - P
Substituting the values
= 9240−8000
= 1240
Case 2 - When compounded half- yearly
A = P(1+r/100)
n
Substituting the values
= 8000(1+5/100)
3
By further calculation
=8000×21/20×21/20×21/20
=9261
We know that
CI=A−P
Substituting the values
=9261−8000
=1261
Here the difference between two CI=1261−1240=21
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