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Find the difference between compound interest and simple interest on sum of ₹45000 at 12% per annum for 5 years.?
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Find the difference between compound interest and simple interest on s...



Difference between Compound Interest and Simple Interest:

Simple Interest:
- Simple Interest formula: SI = P * R * T / 100
- Given: P = ₹45000, R = 12%, T = 5 years
- Calculate: SI = 45000 * 12 * 5 / 100 = ₹27000

Compound Interest:
- Compound Interest formula: CI = P * (1 + R/100)^T - P
- Given: P = ₹45000, R = 12%, T = 5 years
- Calculate: CI = 45000 * (1 + 12/100)^5 - 45000 = ₹31599

Difference:
- Difference = CI - SI = ₹31599 - ₹27000 = ₹4599
Therefore, the difference between compound interest and simple interest on the sum of ₹45000 at 12% per annum for 5 years is ₹4599. Compound interest is calculated on both the initial principal and the interest accumulated over previous periods, while simple interest is only calculated on the principal amount. This results in compound interest being higher than simple interest for the same time period and interest rate.
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Find the difference between compound interest and simple interest on sum of ₹45000 at 12% per annum for 5 years.?
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