Question

Amrita deposited ₹ 10,00,000 in a bank where the rate of interest is 10% compounded annually. She deposited it for a period of three years. Find the difference in the amount, if the interest is calculated in simple interest for the same sum of money and same rate of interest and period.

• A. ₹ 31000
• B. ₹ 21000
• C. ₹ 21000
• D. ₹ 53000

Answer 1

The correct option is A

₹ 31000

P = ₹ 10,00,000 R = 10 % and n = 3 years

For Compound interest
$A=P(1+\frac{R}{100}{)}^n$
$A=10,00,000\times (1+\frac{10}{100}{)}^3$
$A=10,00,000\times \left(\frac{11\times 11\times 11}{10\times 10\times 10}\right)$
$A=₹(1000\times 1331)$
$A=₹1331000$

In Simple Interest
For three years,
$I=\frac{10}{100}\times 1000000\times 3$
$=300000$

Amount in Simple Interest
= ₹ 10,00,000 + ₹ 3,00,000
= ₹ 13,00,000

Difference in Amount
= ₹ 13,31,000 - ₹13,00,000
= ₹ 31000