Find the difference between simple interest and compound interest on $R s 6000$ for $2$ years at $10 %$ per annum.

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Solution

Given Rate of interest is $r = 10 % = 0.1$
Principal Amount is $A = 6, 000$
Time is $t = 2$ years
Interest is compounded yearly once $⟹ n = 1$
Amount $= P (1 + \frac{r}{n})^{n t} = 6000 \times (1 + 0.1)^{2} = 7260$
Interest is $A - P = 7260 - 6000 = 1260$
Simple Interest is $\frac{6000 \times 10 \times 2}{100} = 1200$
Difference between simple interest and compound interest is $1260 - 1200 = 60$

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