Question

Raman borrowed rupees 5000 at 8 percent per annum for 3 years. Find the difference between compound interest and simple interest, assuming compounded annually​

Answer 1

Answer: 98.56 rupees

Step-by-step explanation:

Known:

Principal = 5000 rupees

Rate = 8% / year

Time = 3 years

*(First of all, let's go with the simple interest:)

= ( P x R x T ) + P

= (5000 rupees x 8/100 x 3) + 5000 rupees

= 6200 rupees

*(Now, let's go with the compound interest:)

A = P(1 + \frac{r}{n})^{nt}

= 5000 rupees ( 1 + 8/100 )^3

= 5000 x 108/100^3

= 6,298.56 rupees

Difference:

= (6298.56 - 6200) rupees

= 98.56 rupees

Hope it helps :D