Question
A man deposited Rs. 16000 at 10% compound interest,
compounded annually while Rs. 14000 at 13% simple interest per annum. What will be the difference between the compound interest and the simple interest earned by him after 3 years?Solution
Compound interest earned by the man in 3 years = 16000 × {(1 + 10/100)3 – 1)} = 16000 × 0.331 = Rs. 5296 Simple interest earned by the man in 3 years = 14000 × 0.13 × 3 = Rs. 5460 Required difference = 5460 – 5296 = Rs. 164
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