Question

Find the difference between simple interest and compound interest (compounded annually) on rs 2000 for 2 years at the rate of 8% per anum

Answer 1

Answer:

SI = PTR/100

= (2000*2*8)/100

= 20*2*8

= ₹ 320

Hence total = ₹ 2000 + ₹ 320 = ₹ 2320

Hence total amount to be paid if calculated using Simple interest = ₹ 2320

Now , Calculating compound interest for 1 year

Compound interest for 1 year = PTR/100 = (2000*1*8)/100 = ₹ 160

Now calculating for the second year

Principal for the second year = ₹ 2000 + ₹ 160 = ₹ 2160

Compound interest for 2 nd year = PTR/100 = (2160*1*8)/100

= ₹ 172.8

Hence total money to be paid = ₹ 2160 + ₹ 172.8

= ₹ 2,332.8

Difference between C.I. and S.I. is ₹ 2,332.8 - ₹ 2320 = ₹ 12.8

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