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
The certain sum amounts to Rs. 9,982.50 in \(2\frac{1}{2}\) years at 12% p.a., interest compounded 10-monthly. The sum (in Rs.) is:
The difference between the simple interest and the compound interest compounded annually on a certain sum of money for 2 years at a rate of 8% per annum is Rs. 16.80. Find the principle amount.
If a sum of ₹ 2000 is lent at 10% p.a. compound interest, what is the interest for the second year?
A sum becomes 5 times of itself in 3 years. at compound interest (interest is compounded annually). In how many years. will the sum becomes 125 times of itself?
If the compound interest on a certain sum of money for two years at 9% p.a. is Rs. 3,762, then the sum is:
