Question

What will be the difference in compound and simple interest for sum of rs 540 in 2 years at 10% annum?

Answer 1

Simple interest:

(540 × 0.1) × 2 = 108

Sum: 540 + 108 = 648 Rs.

Compound interest:

(540 × $1.1^{2}$) = 653.4 Rs.

Difference: 653.4 - 648 = 5.4 Rs.