What is the difference between simple interest and compound interest for 2 years at the rate of 5% on Rs.1000?
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Answer:
Interest is the cost of borrowing money, where the borrower pays a fee to the lender for the loan. ... Simple interest is based on the principal amount of a loan or deposit. In contrast, compound interest is based on the principal amount and the interest that accumulates on it in every period.
Step-by-step explanation:
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Step-by-step explanation:
Case 1:
SI=PRT/100
SI= 1000×2×5/100
SI= ₹100
Case 2:
CI=P(1+R/100)^T-P
Cl=1000×(1+5/100)^2-1000
CI=1000×(105/100)^2-1000
CI=1000×(21/20)^2-1000
CI=1000×441/400-1000
CI=10×110.25-1000
CI=1102.5-1000
CI=₹102.50
THEREFORE DIFFERENCE BETWEEN CI AND SI
=₹102.50-₹100
=₹2.50(ANS)
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