Question

Find the diffrence between the interest on a) a sum of 20,000 diposited in a bank for 2 years at 10% compound annualy b) a sum of 20,000 diposited in 2 years at 10% simple interest. which one is greater and why.

Answer 1

Answer:

Step-by-step explanation:

The compound interest is higher because simple interest will be same for the first year and second year and it will be static and will not change.

But in the case of compound interest the interest received will be added to the principal and will be considered as principal for the next year.

So compound interest will be more

Answer 2

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$\underline\bold{\huge{ANSWER \: :}}$  

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6] (a) GIVEN INFORMATIONS :

(i) P = Rs. 20,000

(ii) n = 2 years

(iii) r = 10%

Using the formula, we get :

C. I. = P [(1+r/100)^n - 1]

=> C. I. = 20000 [(1+10/100)²-1]

=> C. I. = 20000 [(11/10)²-1]

=> C. I. = 20000 [(121/100)-1]

=> C. I. = 20000 × (21/100)

=> C. I. = Rs. 4200

So, C. I. = Rs. 4200

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6] (b) GIVEN INFORMATIONS :

(i) P = Rs. 20,000

(ii) t = 2 years

(iii) r = 10%

Using the formula, we get :

S. I. = Prt/100

=> S. I = (20000×2×10)/100

=> S. I. = Rs. 4000

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◼ Obviously the compound interest (Rs. 4200) is greater than the simple interest (Rs. 4000) on Rs. 20,000 for 2 years @ 10% per annum. 


◼ Now, The difference between these two interests will be = Rs. (4200-4000) = Rs. 200 [REQUIRED ANSWER.]

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