Question

Without using the formula, find the difference between compound interest and the simple interest on ₹ 16,000 at 9% per annum in 2 years.

• A. ₹ 150
• B. ₹ 144.60
• C. ₹ 135.60
• D. ₹ 129.60

Answer 1

The correct option is D

₹ 129.60

P = ₹ 16,000; R = 9%; T = 2 years

Simple Interest for 2 years = $\frac{PTR}{100}$

= $\frac{16,000\times 2\times 9}{100}$

= ₹ 2880

Compound Interest for 1st year
= $\frac{16000\times 1\times 9}{100}$
= ₹ 1440

Principal for second year
= ₹ 16,000 + 1440
= ₹ 17440

Compound Interest for 2nd year
= $\frac{17440\times 1\times 9}{100}$
= ₹ 1596.60

Total Compound Interest
= ₹ 1440 + ₹ 1596.60
= ₹ 3009.60

Hence the difference between C.I and S.I
= ₹ 3009.60 - 2880
= ₹ 129.60