Question

Find the difference between compound interest and simple interest on an amount of $₹15,000$ for $2$ years at $8$% per annum.
[3 Marks]

Answer 1

Given,
$P=₹15,000$,
$T=2$ years
$R=8$%

We know that Simple Interest = $\frac{P\times T\times R}{100}$

= $\frac{15000\times 2\times 8}{100}$

= $₹2,400$
[1 Mark]

C.I. for the first year

Amount $=P(1+\frac{R}{100}{)}^T$

$=15,000(1+\frac{8}{100}{)}^2$

$=₹17,496$
[1 Mark]

Compound interest $=₹17496-₹15,000$

$=₹2,496$

Difference between compound interest and simple interest
$=₹2,496-₹2,400$
$=₹96$
[1 Mark]