Question

Find the difference between the simple interest and compound interest on₹16,000 for 3/2 years at 5 per annum, compound interest being reckoned half yaerly

Answer 1

Solution:-
Case 1 :
Simple Interest on Rs. 16000
S. I. = (P*R*T)/100
= (16000*3*5)/(100*2)
Simple Interest = Rs. 1200
Case 2 :
Compound Interest on Rs. 16000
Time = 3/2 years = 3 half years because the compound interest is being reckoned half yearly and the rate of interest will be 2.5 %.
A = P(1 + r/100)ⁿ
= 16000(1 + 2.5/100)3
16000 × 102.5/100 × 102.5/100 × 102.5/100
Amount = Rs. 17230.25 
Compound Interest = A - P
C. I. = 17230.25 - 16000
C. I . = Rs. 1230.25
Difference between C. I . and S. I. = 1230.25 - 1200 = Rs.30.25
Answer.