Question

Calculate the difference between the compound interest and the simple interest on Rs. 4,000 at 8 per cent per annum and in 2 years.

Answer 1

$Simpleinterestwillbe\frac{P\times T\times R}{100}=\frac{4000\times 2\times 8}{100}=640$

$C.I.=P{(1+\frac{r}{100})}^2-P$

$C.I.=4000{(1+\frac{8}{100})}^2-4000$

$C.I.=4000\left(1.1164\right)-4000$

$C.I.=4666-4000$

$C.I.=666$

$DifferencebetweenSimpleInterestandCompoundInterestis666-640=26$