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Question

Calculate the difference between the compound interest and the simple interest on Rs. 7500 in two years and at 8% per annum.

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Solution

Principal (P)=Rs. 7500
Rate(R)=8% p.a.
Period(T)=2 years
Simple interest= PTR100=7500×8×2100
= Rs. 1200
Interest for the first year= 7500×8×1100
=Rs. 600
Amount at the end of first year = P+S.I.
=Rs. 7500 +Rs. 600=Rs. 8100
Principal for the second year=Rs. 8100
interest for the second year= 8100×8×1100
=Rs. 648
Total C.I. for 2 years = Rs. 600 + Rs. 648
= Rs. 1248
Difference between C.I. and S.I. for 2 years = Rs. 1248 - Rs. 1200= Rs. 48

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