Question

Find the difference between S.I. and C.I. on $Rs.25,000$ at $9\%$ per annum for $2$ years.

Answer 1

Simple Interest $=Rs\frac{25000\times 9\times 2}{100}=Rs4500$

Compound Interest:

Interest for the $1^{st}$ year $=Rs\frac{25000\times 9\times 1}{100}=Rs2250$

Amount after the $1^{st}$ year $=Rs25000+Rs2250=Rs27250$

Interest for the $2^{nd}$ year $=Rs\frac{27250\times 9\times 1}{100}=Rs2452.50$

Amount after the $2^{nd}$ year $=Rs27250+Rs2452.50=Rs29702.50$

$\therefore$ Compound Interest $=Rs29702.50-Rs25000=Rs4702.50$

$\therefore$ Difference between Compound Interest and Simple Interest $=Rs4702.50-Rs4500=Rs202.50$