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What is the difference ( in rs.) between the simple interest and compound interest in sum of rs.8000 for 2 2/5 years at the rate of 10% p.a. when the interest is compounded yearly ?
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What is the difference ( in rs.) between the simple interest and compo...
Calculation of Simple Interest:
- Principal = Rs. 8000
- Time = 2 2/5 years = 12/5 years
- Rate of interest = 10% p.a.
- Simple Interest = (P x T x R)/100
- Simple Interest = (8000 x 12/5 x 10)/100
- Simple Interest = Rs. 1920
Calculation of Compound Interest:
- Principal = Rs. 8000
- Time = 2 2/5 years = 12/5 years
- Rate of interest = 10% p.a.
- Compound Interest = P[(1+R/100)^T - 1]
- Compound Interest = 8000[(1+10/100)^(12/5) - 1]
- Compound Interest = Rs. 2195.68
Difference between Simple Interest and Compound Interest:
- Difference = Compound Interest - Simple Interest
- Difference = Rs. 275.68
Explanation:
- Simple interest is calculated only on the principal amount whereas compound interest is calculated on the principal amount as well as the interest earned in the previous year.
- In this case, the difference between simple interest and compound interest is Rs. 275.68.
- This difference occurs because in compound interest, the interest earned in the previous year is added to the principal amount and interest is calculated on the increased amount.
- Therefore, over a period of time, compound interest yields higher returns than simple interest.
- It is important to note that the frequency of compounding also plays a crucial role in the calculation of compound interest.
- Principal = Rs. 8000
- Time = 2 2/5 years = 12/5 years
- Rate of interest = 10% p.a.
- Simple Interest = (P x T x R)/100
- Simple Interest = (8000 x 12/5 x 10)/100
- Simple Interest = Rs. 1920
Calculation of Compound Interest:
- Principal = Rs. 8000
- Time = 2 2/5 years = 12/5 years
- Rate of interest = 10% p.a.
- Compound Interest = P[(1+R/100)^T - 1]
- Compound Interest = 8000[(1+10/100)^(12/5) - 1]
- Compound Interest = Rs. 2195.68
Difference between Simple Interest and Compound Interest:
- Difference = Compound Interest - Simple Interest
- Difference = Rs. 275.68
Explanation:
- Simple interest is calculated only on the principal amount whereas compound interest is calculated on the principal amount as well as the interest earned in the previous year.
- In this case, the difference between simple interest and compound interest is Rs. 275.68.
- This difference occurs because in compound interest, the interest earned in the previous year is added to the principal amount and interest is calculated on the increased amount.
- Therefore, over a period of time, compound interest yields higher returns than simple interest.
- It is important to note that the frequency of compounding also plays a crucial role in the calculation of compound interest.
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What is the difference ( in rs.) between the simple interest and compo...
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What is the difference ( in rs.) between the simple interest and compound interest in sum of rs.8000 for 2 2/5 years at the rate of 10% p.a. when the interest is compounded yearly ?
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What is the difference ( in rs.) between the simple interest and compound interest in sum of rs.8000 for 2 2/5 years at the rate of 10% p.a. when the interest is compounded yearly ? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about What is the difference ( in rs.) between the simple interest and compound interest in sum of rs.8000 for 2 2/5 years at the rate of 10% p.a. when the interest is compounded yearly ? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the difference ( in rs.) between the simple interest and compound interest in sum of rs.8000 for 2 2/5 years at the rate of 10% p.a. when the interest is compounded yearly ?.
What is the difference ( in rs.) between the simple interest and compound interest in sum of rs.8000 for 2 2/5 years at the rate of 10% p.a. when the interest is compounded yearly ? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about What is the difference ( in rs.) between the simple interest and compound interest in sum of rs.8000 for 2 2/5 years at the rate of 10% p.a. when the interest is compounded yearly ? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the difference ( in rs.) between the simple interest and compound interest in sum of rs.8000 for 2 2/5 years at the rate of 10% p.a. when the interest is compounded yearly ?.
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