Find the difference between the simple interest and compound interest on $R s 4800$ for $2$ years at $5 %$ per annum, compound interest being reckoned annually.

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Solution

Simple Interest:
$P = R s 4800$ $r = 5 % p . a$ $t = 2 y e a r s$
$∴ S I = \frac{P t r}{100} = R s . \frac{4800 \times 2 \times 5}{100} = R s 480$

Compound interest:
Case I
$P = R s 4800$ $r = 5 % p . a .$ $t = 1 y e a r$
Interest $= R s . \frac{4800 \times 5 \times 1}{100} = R s 240$
$∴ A = R s (4800 + 240) = R s 5040$
Case II
$P = R s 5040$ $r = 5 % p . a .$ $t = 1 y e a r$
Interest $= R s . \frac{5040 \times 5 \times 1}{100} = R s 252.$
$∴ A = R s (5040 + 252) = R s 5292$ .
$∴$ Compound Interest $= R s (5292 - 4800) = R s 492$
$∴$ Difference between compound Interest and Simple Interest $= R s (492 - 480) = R s .12$

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Find the difference between the simple interest and compound interest on Rs 4800 for 2 years at 5% per annum, compound interest being reckoned annually.

Find the difference between the simple interest and compound interest on $R s 4800$ for $2$ years at $5 %$ per annum, compound interest being reckoned annually.