What will be the Difference? if

What will be the difference between compound and simple interest on Rs. 11, 000 for 2 years at 6% p.a?

  1. Rs. 39.60
  2. Rs. 41.40
  3. Rs. 38.70
  4. Rs. 35.50
Desire Adnan Default Asked on 4th August 2015 in Maths.
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1 Answer(s)

Answer: (1) 39.60
Explanation:-
Given-
Principal = Rs.11,000 Time = 2 years , Rate = 6 %.

Formula-
Simple Interest = P x R x T/100
Where, P = principal , R = rate, & T = time.

Then, the Simple interest = 11,000 x 2 x 6 /100
= 110 x 12
= Rs.1320

Formula-
Compound Interest = P [(1 + R/100)t – 1]
Where, P = principal, R = rate, t = time.

Then, the compound interest = 11000(1 + 6/100)^2 –  11000
= 11000 x (1 + 3/50)^2 – 11000
= 11000 x 53 x 53/50 x 50 – 11000
= 22 x 53 x 53 /5 – 11000
= 61798/5 – 11000
= 12359.6 – 11000
= Rs.1359.6

The difference between compound and simple interest = 1359.6 – 1320
= Rs.39.60

Hence, the answer is (1) Rs.39.60

Anurag Mishra Professor Answered on 5th August 2015.
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