Question

find the difference between the simple interest and compound interest on 2500 for 2 years at 4%per annum compound interest being reckoned semi-annually with understand handwriting
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Answer 1

Answer:

It is given that 

Principal (P) = 2500

Rate of interest (r) = 4% p.a. or 2% half-yearly

Period (n)= 2 years or 4 half- years 

We know that 

SI= Prt/100

Substituting the values 

= (2500×4×2)/100

= 200

If compounded semi-annually

A =  P(1+r/100)n

Substituting the values 

= 2500(1+2/100)4

By further calculation 

=2500×51/50×51/50×51/50×51/50

= 2706.08

We know that 

CI = A - P

Substituting the values 

=2706.08−2500

=206.08

So the difference between CI and SI =206.08−200=6.08