Question

Find the difference between simple interest and compound interest on ₹ 20000 at 8 p.c.p.a.

Answer 1

simple intrest is based on principle amount of a loan or diposite.
compound interest is based on the amount and the intrest that accumulates on it in every period.

Answer 2

Answer:

Rs 128  in two years

Step-by-step explanation:

Find the difference between simple interest and compound interest on ₹ 20000 at 8 p.c.p.a.

To find the difference between compound interest & simple interest we should know the time period as well

Let say for two years

For first Year Simple interest = Compound interest

Interest for first year = 20000 * 8 * 1 /100 = Rs 1600

Simple interest for second year would be Rs 1600 again

But for compound interest interest will be calculate on Priciple + first year interest = 20000 + 1600

Interest = 21600 * 8 * 1/100 = 1728

Simple interest earned in two years = 1600 + 1600 = Rs 3200

Compound interest earned in two years = 1600 + 1728 = Rs 3328

Difference = 3328 - 3200 = Rs 128

Another way

Simple interest for two years = 20000 * 8 * 2/100 = Rs 3200

Compound interest for two Years = 20000(1 + 8/100)² - 20000

= 20000( 1.08² - 1)

= 20000 * 2.08 * .08

= 3328 Rs

Difference = 3328 - 3200 = Rs 128