Question

What is the difference between the simple interest and compound interest accrued on Rs. $12,000$ at $16$% p.a. for two years?

• A. $Rs.720$
• B. $Rs.307.20$
• C. $Rs.476.80$
• D. $Rs.680$

Answer 1

The correct option is B $Rs.307.20$

P $=12000$ , R $=16\%$ , T $=2$

we know that Simple Interest $=\frac{PRT}{100}$

$⟹\frac{12000\times 16\times 2}{100}=3840$

Compound Interest $=P{(1+\frac{R}{100})}^T-P=12000{(1+\frac{16}{100})}^2-1$

CI $=4147.2$

CI$-$SI $=4147.2-3840=307.2$