Swapnil took a loan of ₹ 22000 from a bank at 20% p.a. Compounded annually for 2 years. Will there be any change if the same amount is taken with Simple interest? Explain.
Answers
Answer:
There will be change of Rs 880 if the same amount is taken with
simple interest.
Step-by-step explanation:
Given : Loan amount = P = Rs 22000
Interest rate = R= 20 %
Period = T = 2 years
compounding frequency = N=1
Compound interest = ?
Simple interest = ?
Solution : Compound interest I = P(1+R/Nx100)^NT - P
= 22000(1+20/1x100)^1x2 - 22000
= 22000x(1+0.2)^2 - 22000
= 22000 x 1.2² - 22000
= 22000 x 1.44 - 22000
= 22000 x (1.44-1)
= 22000 x 0.44
= 9680 Rs
Simple interest = PTR/100
= 22000 x 2 x 20/100
= 8800 Rs
The change in interest = compound interest - simple interest
= 9680 - 8800
= 880 Rs