Question

Find the difference between the compound interest and the simple interest on Rs.5000 at after
2 years at 12% pa; if the interest is compounded after every 8 months

Answer 1

Answer:98.56

Step-by-step explanation:

Given

Principal(P) = 5000

Time(T) =2 years

Rate(R)=12%

Now,we need Simple interest

$=\frac{P*R*T}{100}$

⇒$\frac{5000*12*2}{100}$

⇒$SI=1200$

And the compound interest formula is compounded after every 8 months

$Time Changes To= \frac{12 month}{8 month} * T =\frac{3}{2} * T$

$Rate Changes To= \frac{12 month}{8 month} * R =\frac{3}{2} * R$

So the Compound Interest is calculated as

$CI=P(1+\frac{R}{100} )^{2} - P$

$=5000(1+\frac{12}{\frac{3}{2}* 100} )^{2*\frac{3}{2} } - 5000$

$=5000(1+\frac{8}{ 100} )^{3 } - 5000$

$=5000(\frac{108*108*108}{100*100*!00} )-5000$

⇒$6298.56- 5000 = 1298.56$

So, The difference of CI and SI is

Difference: CI- SI = 1298.56-1200 = 98.56