Question
A man deposited Rs. 18000 at 10% compound interest,
compounded annually while Rs. 17500 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 = 18000 × {(1 + 10/100)3 – 1)} = 18000 × 0.331 = Rs. 5958 Simple interest earned by the man in 3 years = 17500 × 0.13 × 3 = Rs. 6300 Required difference = 6300 – 5958 = Rs. 342
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