# Find Difference between Simple and Compound Interest

The difference between the simple interest and the compound interest on Rs 5000 at 10% p.a. for 3 years is:

- Rs. 145
- Rs. 150
- Rs. 165
- Rs. 155

**Answer: (4) Rs. 155**

Explanation:-

Given-

Principal = Rs. 5000, Rate = 10% and Time = 3 years

**Formula-**

**Simple Interest = P x R x T/100**

**Where, P = principal, R = rate, & T = time.**

**Then, the simple interest = 5000 x 10 x 3/100 = Rs. 1500**

**Formula-**

**Compound Interest = P [(1 + R/100)**^{t}** ****– 1]**

**Where, P = principal, R = rate, t = time.**

**Then, the compound interest = 5000[ (1 + 10/100) ^{3} – 1] = 5000 [ (1 + 1/10)^{3} – 1] = 5000 (11 x 11 x 11/10 x 10 x 10 – 1) = 5000 (1.331 – 1) = 5000 x 0.331 = Rs. 1655**

**Then, the difference between compound interest and simple interest = 1655 – 1500 = Rs. 155**

**Hence, the answer is (4) Rs. 155.**