Question
The simple interest on a sum for 2 years at 10% per annum is Rs 4,000. Find the difference between the compound interest and the simple interest on the same sum, at the same rate and time.
Solution
Let principal = P. SI for 2 years = P × 10 × 2 /100 = P/5 Given P/5 = 4,000 ⇒ P = 20,000 Difference (CI − SI) for 2 years at rate r% = P × (r/100)² r = 10 ⇒ r/100 = 0.10 Difference = 20,000 × (0.10)² = 20,000 × 0.01 = Rs 200.
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