Question

The difference between simple and compound interest of sum rs 5000 lent at 12% per annum in 2 years is

Answer 1

Simple interest = PNR/100

N = 2 and R = 12:  P =5000

Hence simple interest = 12(2)5000/100 = 1200 rupees

Compound interest = P(1+R/100)^n-P where

N = 2 and R = 12 here

Compound interest = 5000[(1.12)^2-1] = 1272

The difference between the compound interest and simple interest on a  sum rs 5000 lent at 12% per annum in 2 years is

compound interest - simple interest

=1272-1200 = 72 rupees