Question

What will be the difference between compound interest and simple interest on rupees 2000 at 5% p.a for 2 years

Answer 1

Answer:

Answer

Principal sum P=Rs.2000

Time period (t)=3 years

Rate of interest (R)=8% per annum

As we know that,

S.I.=

100

P×R×t

⇒S.I.=

100

2000×3×8

=Rs.480

Also,

A=P(1+

100

R

)

t

A=2000(1+

100

8

)

3

⇒A=2000×(

25

27

)

3

⇒A=Rs.2519.424

Therefore,

C.I.=A−P

⇒C.I.=2519.424−2000=Rs.519.424

Now,

Difference between compound interest and simple interest =519.424−480=Rs.39.424