Question

Find the difference between the compound interest and simple interest on a sum of Rs. $16,000$ for $3$ years if the rate of interest is $2\%$ per annum.

Answer 1

Given,

$SI=\frac{PRT}{100}=\frac{16000\left)\right(2\left)\right(3)}{100}=960$

$CI=P{[1+\frac{R}{100}]}^T-P$

$=16000[{(1+\frac{2}{100})}^3-1]$

$=16000\left[\right(1.02{)}^3-1]$

$=16000\left[0.061208\right]=979.328$

Difference$=CI-SI=19.328$ Rs.