Please solve this question , calculate the difference between the compound interest and the simple interest on Rs. 2000 in 2 years at 8% per annum. And also tell me how to solve it ?
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Simple interest for every year is same.
S.I. for 1 year = PxR/100 ( where P = principal and R = rate of interest)
for this ques. S.I. for 1st year = 2000x8/100 = 160rs.
and S.I for 2nd year is also same = 160 rs.
but compound interest is calculated on the money in the beginning of each year.
so C.I. for 1st year = 160 rs.
C.I. for 2nd year = 160 + 8% of 160 = 160 + 12.8 rs.
because at the end of 1st year now your money is 2000+160 so the interest will he calculate on that extra 160 rs. also
difference between c.i. and s.im in 2 years = 12.8 rs.
S.I. for 1 year = PxR/100 ( where P = principal and R = rate of interest)
for this ques. S.I. for 1st year = 2000x8/100 = 160rs.
and S.I for 2nd year is also same = 160 rs.
but compound interest is calculated on the money in the beginning of each year.
so C.I. for 1st year = 160 rs.
C.I. for 2nd year = 160 + 8% of 160 = 160 + 12.8 rs.
because at the end of 1st year now your money is 2000+160 so the interest will he calculate on that extra 160 rs. also
difference between c.i. and s.im in 2 years = 12.8 rs.
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