The difference between the compound interest and simple interest for the sum of ₹5,000 at 10% per annum for two years is:
₹50
To solve the problem of finding the difference between compound interest (CI) and simple interest (SI) for a sum of ₹5,000 at an interest rate of 10% per annum over two years, follow these steps:
- Calculate Simple Interest (SI): The formula for simple interest is SI = P × R × T / 100, where P is the principal amount, R is the rate of interest per annum, and T is the time period in years.
Here, P = ₹5000, R = 10%, T = 2 years.
SI = 5000 × 10 × 2 / 100 = ₹1000 - Calculate Compound Interest (CI): The formula for compound interest is CI = P(1 + R/100)T - P.
Substituting the values, CI = 5000(1 + 10/100)2 - 5000
CI = 5000 × (1.1)2 - 5000
CI = 5000 × 1.21 - 5000
CI = ₹6050 - ₹5000
CI = ₹1050 - Find the Difference: The difference between compound interest and simple interest is CI - SI.
Difference = ₹1050 - ₹1000 = ₹50
Hence, the difference between the compound interest and simple interest is ₹50, which matches the given correct option.
Important Questions from Compound Interest
A person borrowed Rs. 10000 on compound interest at the rate of 40 percent per annum. If the interest is compounded half yearly, then what will be the amount to be paid after 1.5 years?
The difference between the compound interest (compounding annually) and the simple interest on a sum of money at the rate of 40 per cent per annum for 2 years is Rs. 2400. What is the amount?
In how many years will a sum of Rs.1875 amount to Rs.2187 at 8 percent p.a. compound interest?
A sum of money has increased by 45% in 9 years at simple interest. What will be the compound interest of Rs. 12,000 after 3 years at the same rate?
At a certain rate of compound interest a certain sum amounts to Rs. 64800 in 4 years and Rs. 93312 in 6 years. What is the compound interest earned in fifth year?
