Question

What will be the difference between simple and compound interests at the rate of 10% per annum on a sum of ₹ 1000 after 4 years?

• A. ₹ 64.10
• B. ₹.40.40
• C. ₹32.10
• D. ₹ 31

Answer 1

The correct option is A ₹ 64.10

Given: Principal, P = ₹ 1000, rate of interest, r =10% and time, t = 4 years

$\text{Simple interest, S.I =}\frac{P\times r\times t}{100}=\frac{1000\times 10\times 4}{100}=₹400$

The amount at the end of n years when compounded annually,

$A=P{(1+\frac{R}{100})}^n=1000{(1+\frac{10}{100})}^4=1000{\left(\frac{11}{10}\right)}^4=1000\times \frac{11\times 11\times 11\times 11}{10\times 10\times 10\times 10}=₹1464.1$

$\text{Compund interest, C.I. = A - P}=₹(1464.1-1000)=₹464.1$

$\therefore C.I.-S.I.=₹64.10$