Company E offers compound interest under Scheme I and Company A offers simple interest under Scheme IV. What will be the difference between the interest earned under the Scheme I of Company E and Scheme IV of Company A respectively in two years on an amount of Rs. 1.2 lakhs ?

Rate of interest in company E under scheme I = 9 %

Compound interest = $$P [(1 + \frac{R}{100})^T - 1]$$

= $$1,20,000 [(1 + \frac{9}{100})^2 - 1]$$

= $$1,20,000 (\frac{11881}{10000} - 1)$$

= $$1,20,000 \times \frac{1881}{10000} = Rs. 22,572$$

Rate of interest in company A under scheme IV = 10 %

Simple interest = $$\frac{P \times R \times T}{100}$$

= $$\frac{1,20,000 \times 10 \times 2}{100}$$

= Rs. $$24,000$$

$$\therefore$$ Required difference = Rs. $$(24,000 - 22,572)$$

= $$Rs. 1,428$$