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
At what rate percent per annum will Rs. 7200 amount to Rs. 7938 in one year, if interest is compounded half yearly?
What is the compound interest (in Rs.) on a sum of Rs. 8192 for \(1 \frac{1}{4}\) years at 15% per annum, if interest is compounded 5-monthly ?
What is the difference (in Rs.) between the interests on Rs. 50,000 for one year at 8% per annum compounded half yearly and yearly?
A sum of money becomes Rs. 11,880 after 4 years and Rs. 17,820 after 6 years on compound interest, if the interest is compounded annually. What is the half of the sum (in Rs.)?
A sum invested at compound interest amounts to Rs. 7,800 in 3 years and Rs. 11,232 in 5 years. What is the rate per cent?
