Question 72

On a certain sum of money, the Simple Interest for 2 years is Rs.140 at 4% per annum. Find the difference between Compound Interest and Simple Interest on the same sum at same rate and same period.

Solution

Given ,

SI = 140Rs, R = 4% , T = 2 Years , P=x

SO,

SI = ( P*R*T)/100 -> 140=(x*4*2)/100 -> x = 1750 rs.

CI=> A = P(1 + R/100)^N

P= 1750 rs , T= 2Years , R= 4%

A = 1750(1+(4/100))^2 = 1892.8 Rs

CI= A - P = 1892.8- 1750 = 142.8 rs

difference between Compound Interest and Simple Interest = 142.8 - 140 = 2.8 rs

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