A principal of ₹ 50,000 is invested at the rate of 10% for 2 years in compound interest. Find the compound interest and the difference between C.I and S.I.
₹ 10,500 , ₹ 500
According to the question, interest is only for 2 years
P = ₹ 50,000
In compound interest, interest is calculated annually.
Amount after 1st year is A1 = 50,000×10100= ₹ (5,000 + 50,000) = ₹ 55,000
Similarly A2=55,000+(55,000×10100) = ₹ 60,500
Total compound interest = A2−A1 = ₹ 60,500 - ₹ 50,000 = ₹ 10,500
In Simple Interest
SI =PNR100 = 50,000×10×2100 = ₹ 10,000
The simple interest is ₹ 10,000 and compound interest is ₹ 10,500. Therefore, the difference is ₹ 500