Question

Question 89

Find the difference between compound interest and simple interest on Rs. 45000 at 12% per annum for 5 yr.

Answer 1

Principal (P) = Rs. 45000
Rate of interest (R) = 12% per annum
Time period (T) = 5 yr
Simple interest, SI $=\frac{P\times R\times T}{100}=\frac{45000\times 12\times 5}{100}=450\times 60=Rs.27000$
$\because$ Compound interest, CI = A - P
where, $A=P{(1+\frac{R}{100})}^T\therefore A=45000{(1+\frac{12}{100})}^5=45000{\left(\frac{28}{25}\right)}^5=45000\times \frac{28}{25}\times \frac{28}{25}\times \frac{28}{25}\times \frac{28}{25}\times \frac{28}{25}=\frac{45000\times 17210368}{9765625}\therefore Compoundinterest,CI=Rs.79200-45000=Rs.34200\therefore DifferencebetweenSIandCI=Rs.34200-Rs.27000=Rs.7200$