Question

Find the difference between compound interest and the simple interest on ₹16,000 at 9% per annum in 2 years.

Answer 1

P = ₹16,000; R = 9%; T = 2 years

Simple Interest for 2 years = $\frac{PTR}{100}$

= $\frac{16,000\times 2\times 9}{100}$

= ₹ 2,880

Compound Interest for 1st year
= $\frac{16,000\times 1\times 9}{100}$
= ₹ 1,440

Principal for second year
= ₹ 16,000 + 1,440
= ₹ 17,440

Compound Interest for 2nd year
= $\frac{17,440\times 1\times 9}{100}$
= ₹ 1,596.60

Total Compound Interest
= ₹ 1,440 + ₹ 1,596.60
= ₹ 3,009.60

Hence the difference between C.I and S.I
= 3,009.60 - 2,880
= ₹ 129.60