Question

find the difference between simple interest and compound interest on Rs. 20,000 at 8 p.c.p.a.

Answer 1

yea, 2 years..........

Answer 2

Answer:

Difference between Simple interest and compound interest is Rs. 128.

Step-by-step explanation:

Given: P = Rs. 20000

           R = 8% p.a.

           T = 2 years

To find: Difference between Simple interest and compound interest

Simple Interest is give by following formula,

$SI=\frac{P\times R\times T}{100}$

      $=\frac{20000\times8\times2}{100}$

      $=200\times8\times2$

      $=3200$

Simple Interest = Rs. 3200

Compound interest is given by following formula,

CI = A - P

Interest is compounded annually

$A=P\times(1+\frac{R}{100})^n$

$A=20000\times(1+\frac{8}{100})^2$

$A=20000\times(\frac{108}{100})^2$

$A=20000\times\frac{108}{100}\times\frac{108}{100}$

$A=2\times108\times108$

$A=23328$

CI = 23328 - 20000

   = Rs. 3328

⇒ CI - SI = 3328 - 3200 = Rs. 128

Therefore, Difference between Simple interest and compound interest is Rs. 128.