Numerical answer
₹12,000 is invested for 2 years at 10% per annum. Find the positive difference (in ₹) between the compound interest (compounded annually) and the simple interest earned.
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Answer: 120
SI = P×r×t/100 = 12000×10×2/100 = ₹2,400. CI = P[(1+r/100)^t − 1] = 12000×(1.21 − 1) = ₹2,520. Difference = 2520 − 2400 = ₹120. Shortcut for 2 years: difference = P×(r/100)² = 12000×0.01 = ₹120.
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