Find the Different Between Simple and Compound Interest : If

The different between simple and compound interest on a sum of Rs. 2000 for 3 years at 20% p.a.will be:

  1. Rs. 248
  2. Rs. 236
  3. Rs. 256
  4. Rs. 266
Monis Rasool Professor Asked on 31st July 2015 in Maths.
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  • 1 Answer(s)

    Answer: (3) Rs.256
    Explanation:-
    Given-
    Principal = Rs.2000, Time = 3 years  Rate = 20 %
    Formula-
    Simple Interest = P x R x T/100
    Where, P = principal , R = rate, & T = time.
    Then, Simple Interest = 2000 x 20 x 3/100
    = Rs.1200
    Formula-
    Compound Interest = P [(1 + R/100)t – 1]
    Where, P = principal, R = rate, t = time.
    Then, C I = 2000[(1 + 20/100)3 – 1]
    = 2000[(1 + 1/5)3 – 1]
    = 2000 x 6 x 6 x 6/5 x 5 x 5 – 2000
    = 16 x 216 – 2000
    = 3456 – 2000
    = Rs.1456
    The different between simple and compound interest = 1456 – 1200
    = Rs.256
    Hence, the answer is (3) Rs.256.

    Anurag Mishra Professor Answered on 31st July 2015.
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