Question

Find the difference between the simple interest and compound interest on rupees 2500 for 2 years at 4% per annum compound interest being reckoned semiannually

Answer 1

FOR SIMPLE INTEREST :
Principal, P = Rs 2500
Rate, R = 4% p.a.
Time, T = 2 yrs
Now,
SI = PRT/100
= (2500×4×2)/100 = Rs 200
FOR COMPOUND INTEREST :
Principal, P = Rs 2500
Rate, R = 4% p.a.
= 2% per half year
Time, n= 2 yrs = 4 half yrsNow,
A = P[1+(R/100)]^n
= 2500[1+(2/100)]^4
= 2500×(51/50)^4
= Rs 2706.0804
Now,
CI = A − P
= 2706.0804 − 2500
= Rs 206.0804
Now,
CI − SI = 206.0804 − 200
= Rs 6.08