What is the difference between the simple and compound interest on Rs. 7,300/- at the rate of 6 p.c.p.a. in 2 years?
(1) Rs. 29.37 (2) Rs. 26.28 (3) Rs. 31.41
(4) Rs. 23.22 (5) Rs. 21.34
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Simple interest
Interest = principle × rate × time
Principle = the amount deposited
Rate = the interest rate
Time = duration of investment.
Interest = 7300 × 0.06 × 2 = 876
Compound interest.
P(1 + i)ⁿ = Amount
7300(1.06)² = 8202.28
Interest = 8202.28 - 7300 = 902.28
The difference is:
902.28 - 876 = 26.28
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