Question

Without using formula, find the difference between the compound interest and the simple

interest on Rs. 16000 at 9% per annum in 2 years.​

Answer 1

Solution:-

Case 1

Given : P = Rs. 16000, R = 5 %, T = 3/2 years  

Simple Interest = (P*R*T)/100

= (16000*5*3)/(2*100)

Simple Interest = Rs. 1200  

Case 2

Compound Interest

Given : P = Rs. 16000, R = 5 % per annum and compounded half yearly so, rate of interest = 2.5 %

T = 3/2 years = 1 year and one half year = 3 half years

A = P (1 +r/100)ⁿ

= 16000 (1 + 2.5/100)³

= 16000 × 102.5/100 × 102.5/100 × 102.5/100

A = Rs. 17230.25

So, compound interest = 17230.25 - 16000 = Rs. 1230.25

Difference between compound interest and simple interest = 1230.25 - 1200 = Rs 30.25