The difference between the compound interest and simple interest on a sum for two years at 20% per annum, where the interest is compounded annually is rs.128. if the interest were compounded half yearly, the difference between simple interest and compound interest would be _____
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We know that
SI = PTR/100
where SI = Simple Interest , P = Principal amount , T = Time , R = Rate of interest Per annum
In the same way
CI = P((1+i)^n-1)
Where CI = Compound interest, P = Principal amount , i= Rate of interest , n= no. of period
Given information
T = n = 2 years (t and n are same because compound interest is Compounded annually)
Rate of interest Per annum= 20%
Given that C.I - S.I = 128
by substituting given information in the formulas.we get
P((1+(20/100))^2)-1) - P*2*20/100 = 128
P((1+0.2)^2 -1)- P*2/5 = 128
Take common 'P'
P( (1.2)^2 -1) - ( 2/5)) = 128
P(1.44 -1 - 0.4) =128
P(0.04) = 128
P= 128/0.04
P = 3500. is the answer
SI = PTR/100
where SI = Simple Interest , P = Principal amount , T = Time , R = Rate of interest Per annum
In the same way
CI = P((1+i)^n-1)
Where CI = Compound interest, P = Principal amount , i= Rate of interest , n= no. of period
Given information
T = n = 2 years (t and n are same because compound interest is Compounded annually)
Rate of interest Per annum= 20%
Given that C.I - S.I = 128
by substituting given information in the formulas.we get
P((1+(20/100))^2)-1) - P*2*20/100 = 128
P((1+0.2)^2 -1)- P*2/5 = 128
Take common 'P'
P( (1.2)^2 -1) - ( 2/5)) = 128
P(1.44 -1 - 0.4) =128
P(0.04) = 128
P= 128/0.04
P = 3500. is the answer
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