Question
A man deposited Rs. 20000 at 10% compound interest,
compounded annually while Rs. 19000 at 12% 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 = 20000 × {(1 + 10/100)3 – 1)} = 20000 × 0.331 = Rs. 6620 Simple interest earned by the man in 3 years = 19000 × 0.13 × 3 = Rs. 6840 Required difference = 6840 - 6620 = Rs. 220
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