Calculate Difference Between Compound Interest And Simple Interest 500 Two Years Annum

Calculate the difference between the compound interest and the simple interest on ₹ 7,500 in two years and at 8% per annum.

Answers:

Principal (P) = ₹7500

Rate (R) = 8% p.a.

Period (T) = 2 Years

∴ Simple interest = PRT/100 = (7500 × 8 × 2)/100

= ₹ 1200

Interest for the first year = (7500 × 8 × 1)/100

= ₹ 600

∴ Amount at the end of first year = P + S.I.

= ₹ 7500 + ₹600

= ₹ 8100

Principal for the second year = ₹8100

∴ Interest for the second year = (8100 × 8 × 1)/100

= ₹ 648

∴ Total C.I. for 2 years = ₹600 + ₹648

= ₹ 1248

∴ Difference between C.I. and S.I. for 2 years

= ₹ 1248 – ₹1200 = ₹48