Question

The difference in the simple interest and compound interest on a principal of Rs.10,00,000 in 3 years at 4% per annum is

Answer 1

Answer:

your answer is 1,004,000

Step-by-step explanation:

Formula of simple interest is p×r×t/100

p=10,00,000

r=4%

t=3 years

so,

10,00,000×4×3/100

=1,20,000

And,

formula of compound interest is A=p(1+r/100)^t

10,00,000(1+4/100)^3

10,00,000(1.04)^3

10,00,000×1.124

1,124,000

So, the difference between simple interest and compound interest is

compound interest-simple interest

1,124,000-1,20,000

1,004,000

Hope it will be help you

Answer 2

Solution:

Principal(P) = Rs. 10,00,000

Rate(r) = 4% per annum

Time(t) =  3 years

Simple Interest=>

A = P (1 + rt)

A = final amount

P = initial principal balance

r = annual interest rate

t = time (in years)

$A = P (1 + rt)$

$A = 1000000 (1 + \frac{4}{100} * 3)$

$A = 1000000 (1 + \frac{12}{100})$

$A = 1000000 (\frac{100 + 12}{100})$

$A = \frac{1000000 * 112}{100}$

$A = 10000 * 112$

$A = 1120000$

Compound Interest=>

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

A = final amount

P = initial principal balance

r = interest rate

n = number of times interest applied per time period

t = number of time periods elapsed

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

$A = 1000000(1 + \frac{\frac{4}{100} }{1})^{1 * 3}$

$A = 1000000(1 + \frac{4}{100})^{3}$

$A = 1000000(1 + 0.04)^{3}$

$A = 1000000(1.04)^{3}$

$A = 1000000 * 1.124864$

$A = 1124864$

The amount after applying simple interest after 3 years is Rs. 1120000

Interest applied Amount = A - P = 1120000 - 1000000 = Rs. 120000

The amount after applying compound simple interest after 3 years is

Rs. 1124864

Compound Interest applied Amount = A - P = 1124864 - 1000000 = Rs. 124864

In the question it is asked to take out difference between compound interest and simple interest

Difference between compound and simple interest = 1124864 - 1120000 = Rs. 4864

The difference between compound and simple interest is Rs. 4864.