Question

Calculate the difference between the compound interest and the simple interest on Rs. $8,000$ in three years and at $10\%$ per annum.

Answer 1

Given
$P=Rs.8,000$
$N=3years$
$R=10\%$
Simple Interest $I=\frac{PNR}{100}$
So, Simple Interest in 3 years $I=\frac{8,000\times 3\times 10}{100}=Rs.2,400$
And Amount after "n" years of interest being compounded annually $A=P{(1+\frac{R}{100})}^n$
So, Amount after 3 years of compound interest $A=8,000\times {(1+\frac{10}{100})}^3=8,000\times {1.1}^3=Rs.10,648$
So, Compound Interest $=A-P=Rs.10,648-Rs.8,000=Rs.2,648$
And difference in CI and SI $=Rs.2,648-Rs.2,400=Rs.248$