Question
A person invested ₹15,000 at a simple interest rate of
20% per annum. Had the amount been invested at a compound interest rate of 20% per annum, compounded annually, how much additional interest would he have earned after 2 years?Solution
Simple interest = Sum X (rate of interest/100) X (time in years) Simple interest earned in two years = 15000 X (20/100) X 2 = Rs. 6,000 And compound interest earned in two years: = 15000 X {1 + (20/100) }2 - 15000 = Rs. 6,600 So, required difference = 6600 - 6000 = Rs. 600
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