Question
A person 'P' invests ₹24,000 at a simple interest rate of 15% per annum for 2 years, while Jay invests the same amount, ₹24,000, at a compound interest rate of 15% per annum (compounded annually) for 2 years. Calculate the difference between the interest earned by both.
Solution
ATQ, Difference between interests earned on investing Rs. 'p' each on simple interest at 'r'% p.a. and compound interest at 'r'% p.a. compounded annually for 2 years = p × (r2 /10,000) So, required difference = 24,000 × (152 /10,000) = (24/10) × 225 = Rs. 540
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