Question

The difference between compound and simple interest at 5 per annum for 4 years on rupees 20000 is

Answer 1

Answer:

310

Step-by-step explanation:

SI = PTR /100 = 20000 * 4 *5 /100 = 4000

CI = P[(1+ R/100)^T-1] = 20000[(1+5/100)^4 - 1 ]

   = 20000 [0.21550] = 4310  

CI - SI = 4310-4000 = 310

Answer 2

Answer:

The difference between Compound Interest and Simple Interest at 5% p.a. for 4 years on Rs. 20000 is Rs. 310.125

Step-by-step explanation:

Given:

Principal = P = 20000

Rate = R = 5% p.a.

Time = T = 4 years

We know that Simple Interest = SI = $\frac{PRT}{100}$

and Compound Interest = CI = $P(1+\frac{R}{100})^T -P$

We need to find the difference between CI and SI

=> CI - SI = $P(1+\frac{R}{100})^T -P$ -  $\frac{PRT}{100}$

Substituting the values,

=> CI - SI = $20000(1+\frac{5}{100})^4 -20000$ -  $\frac{20000*5*4}{100}$

               = 4310.125 - 4000

               = 310.125

Therefore, the difference between Compound Interest and Simple Interest at 5% p.a. for 4 years on Rs. 20000 is Rs. 310.125