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What is the difference between compound interest and simple interest for the sum of ₹ 20,000 over a 2 year period if the compound interest is calculated at 20% and simple interest is calculated at 23%?
- a)₹ 400
- b)₹ 460
- c)₹ 440
- d)₹ 450
Correct answer is option 'A'. Can you explain this answer?
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Calculation of Compound Interest:
Given principal amount (P) = 20,000, rate of interest (R) = 20%, time (T) = 2 years
Compound Interest (CI) = P(1 + R/100)^T - P
CI = 20,000(1 + 20/100)^2 - 20,000
CI = 20,000(1.2)^2 - 20,000
CI = 20,000(1.44) - 20,000
CI = 28,800 - 20,000
CI = 8,800
Calculation of Simple Interest:
Given principal amount (P) = 20,000, rate of interest (R) = 23%, time (T) = 2 years
Simple Interest (SI) = (P * R * T) / 100
SI = (20,000 * 23 * 2) / 100
SI = (46,000) / 100
SI = 460
Difference between Compound Interest and Simple Interest:
Difference = CI - SI
Difference = 8,800 - 460
Difference = 400
Therefore, the difference between Compound Interest and Simple Interest for the sum of 20,000 over a 2 year period is 400.
Given principal amount (P) = 20,000, rate of interest (R) = 20%, time (T) = 2 years
Compound Interest (CI) = P(1 + R/100)^T - P
CI = 20,000(1 + 20/100)^2 - 20,000
CI = 20,000(1.2)^2 - 20,000
CI = 20,000(1.44) - 20,000
CI = 28,800 - 20,000
CI = 8,800
Calculation of Simple Interest:
Given principal amount (P) = 20,000, rate of interest (R) = 23%, time (T) = 2 years
Simple Interest (SI) = (P * R * T) / 100
SI = (20,000 * 23 * 2) / 100
SI = (46,000) / 100
SI = 460
Difference between Compound Interest and Simple Interest:
Difference = CI - SI
Difference = 8,800 - 460
Difference = 400
Therefore, the difference between Compound Interest and Simple Interest for the sum of 20,000 over a 2 year period is 400.
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What is the difference between compound interest and simple interest for the sum of 20,000 over a 2 year period if the compound interest is calculated at 20% and simple interest is calculated at 23%?a) 400b) 460c) 440d) 450Correct answer is option 'A'. Can you explain this answer?
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