Find the difference between Compound Interest and Simple Interest on Rs 45,000 at 12% per annum for 2 years

Asked by alphin.jacob | 7th Jan, 2016, 02:50: PM

Expert Answer:

Given, 
P = 45,000
N = 2 years
R = 12%
 
Calculating Simple Interest 
 
S I space equals space fraction numerator P N R over denominator 100 end fraction equals space fraction numerator 45000 cross times 2 cross times 12 over denominator 100 end fraction S I space equals 10800
 
 
Calculating Compound Interest 
A equals P open parentheses 1 plus R over 100 close parentheses to the power of N equals 45000 open parentheses 1 plus 12 over 100 close parentheses squared equals 45000 open parentheses fraction numerator 100 plus 12 over denominator 100 end fraction close parentheses squared equals 45000 open parentheses 112 over 100 close parentheses squared A space equals space 56448
 
CI = A - P
CI = 56448 - 45000
CI = 11448
 
Diffrence between CI and SI 
 
CI - SI = 11448 - 10800
CI - SI = 648
 
Hence, the difference between the Compound Interest and Simple Interest is Rs. 648

Answered by Keravi Thanani | 7th Jan, 2016, 05:34: PM