Question

Find the difference between simple interest and compound interest on Rs 4,000 for two years at 10% per annum.

• A. Rs 40
• B. Rs 50
• C. Rs 45
• D. Rs 60

Answer 1

The correct option is A Rs 40

For ,
$N=2years$
$R=10$ %
$P=Rs4,000$
We have $S.I.=\frac{PNR}{100}=\frac{4,000\times 2\times 10}{100}=Rs800$
And on interest being compounded for $2$ years and $R=10$ %, $Amount=P(1+\frac{R}{100}{)}^N=4,000\times (1+\frac{10}{100}{)}^2=4,000\times 1.1\times 1.1=Rs.4,840$
So, $C.I.=A-P=4,840-4,000=840$
And required difference $C.I.-S.I.=840-800=Rs40$