Question

Calculate the difference between the compound interest and the simple interest on $Rs20000$ in $2$ years at $8\%$ per annum.

Answer 1

In case of compound interest:-

Amount $\left(A_1\right)=20000{(1+\frac{8}{100})}^2$

$=20000\times {\left(\frac{108}{100}\right)}^2$

$=2\times 11664$

$=23328$

$\therefore$ compound interest $\left(I_1\right)=Rs.(23328-20000)$

$=Rs.3328$

In case of simple interest

$\therefore$ Simple Interest $\left(I_2\right)=\frac{20000\times \left(8\right)\times 2}{100}$

$=Rs.3200$

$thereforeDifference=I_1-I_2$

$=Rs.(3328-3200)$

$=Rs.128$Ans.