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 and R = 8%

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

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

= ₹2400

(0.5 mark)

C.I. for the first year:

C. I. = $\frac{P\times T\times R}{100}$

= $\frac{15000\times 1\times 8}{100}$

= ₹1200

⇒ Principal for the second year:

= ₹15,000 + ₹1200

= ₹16,200

(1 mark)

⇒ C.I. for second year:

C. I. = $\frac{P\times T\times R}{100}$

= $\frac{16200\times 1\times 8}{100}$

= ₹1296

⇒ Total CI for two years = ₹1200 + ₹1296

= ₹2496

(1 mark)

⇒ Difference between CI and SI
= ₹2496 - ₹2400
= ₹96

(0.5 mark)