Question

The difference between simple interest and compound interest on ₹ $1200$ for one year at $10$ per annum reckoned half-yearly is ₹ ___ .

Answer 1

For Simple Interest

Given P = ₹ 1200 ; R = 10 % and T = 1 year

S. I = $\frac{PRT}{100}$

= $\frac{1200\times 10\times 1}{100}$ = $₹120$

Compound Interest is reckoned half yearly

Given P = ₹ 1200 ; R = 10 % and T = $\frac{1}{2}$ year

Hence C.I for the first half year

C. I = $\frac{PRT}{100}$

= $\frac{1200\times 10\times 1}{2\times 100}$ = $₹60$

For the second part of the year or second half year ,

P = 1200 + 60 = 1260

Hence C. I for the second half year

C.I = $\frac{PRT}{100}$

= $\frac{1260\times 10\times 1}{2\times 100}$ = $₹63$

Hence the total C.I = ₹ ( 60 + 63)

= ₹ 123

Difference between C. I and S. I = ₹ 123 - ₹ 120

= ₹ 3