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Question

Find the difference between Simple Interest and Compound Interest for a sum of $$8,000$$ lent at $$10$$% p.a. in $$2$$ years.


Solution

Here, $$P =$$ $$8000$$, $$n = 2$$ years, $$r = 10$$% p.a.
Difference between Compound Interest and Simple Interest for $$2$$ years $$= P {\left(\dfrac{r}{100}\right)}^{2}$$
                                           $$= 8000 {\left(\dfrac{10}{100}\right)}^{2}$$
                                           $$= 8000 {\left(\dfrac{1}{10}\right)}^{2}$$
                                           $$= 8000 \times \dfrac{1}{10} \times \dfrac{1}{10} =$$ $$80$$

Mathematics

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