Question

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

Answer 1

For ,
$N=2years$
$R=8$ %
$P=Rs4,000$

We have $S.I.=\frac{PNR}{100}=\frac{4,000\times 2\times 8}{100}=Rs640$
And on interest being compounded for $2$ years and $R=8$ %, $Amount=P{(1+\frac{R}{100})}^N=4,000\times {(1+\frac{8}{100})}^2=4,000\times 1.08\times 1.08=Rs4,665.60$
So, $C.I.=A-P=4,665.60-4,000=665.60$
And required difference $C.I.=S.I.=665.60=640=Rs25.60$