# 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?

- Rs. 39.60
- Rs. 41.40
- Rs. 38.70
- Rs. 35.50

**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