Question

Find the difference between simple interest and compound interest for $1\frac{1}{2}$ years at 4% per annum, for a sum of Rs 24,000 when interest is compounded semi annually.

Answer 1

Answer:

Rs 628.99

Step-by-step explanation:

Find the simple interest:

Principal = Rs 24000

Period = 1 1/2 year = 1.5 year

Rate = 4% p.a

Interest = PTR/100

Interest = (24000 x 1.5 x 4)/100

Interest = Rs 840

Find the compound interest:

Principal = Rs 24000

Period = 1 1/2 year = 1.5 year

Since it is compounded semi-annually,

Period = 3 periods

Rate = 4% p.a

Since it is compounded semi-annually,

Rate = 4 ÷ 2 = 2% semi-annually

Interest = P(1 + r)ⁿ - P

Interest = 24000(1 + 0.02)³ - 24000

Interest = Rs 1468.99

Find the difference in interest:

Difference = 1468.99 - 840 = Rs 628.99

Answer:  Rs 628.99

Answer 2

Refer to the attachment.