Ganesh invested Rs 40,000 in a bank at 8 p.c.p.a. compound interest for 2 years. What would be difference in the interest earned if he invests the same amount for the same period but for simple interest at the same rate?
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Answer:
Compound interest for 2 Years = Rs 6556
difference in the interest earned = Rs 256
Step-by-step explanation:
Ganesh invested Rs 40,000 in a bank
=> P = 40000
R = 8 % Per annum
n = 2 Years
Compound interest = P(1 + R/100)ⁿ - P
= 40000(1 + 8/100)² - 40000
= 46656 - 40000
= 6656
Compound interest for 2 Years = Rs 6556
Simple interest = P * R * n/100
= 40000 * 8 * 2/100
= 6400
difference in the interest earned = 6656 - 6400 = Rs 256
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