Numerical answer
Find the difference between the compound interest and the simple interest on a sum of Rs. 15,000 for 2 years at an annual rate of 8%.
Show answer and solution
Answer: 96
SI = P×r×t/100 = 15000×8×2/100 = 2400. CI = P[(1+r/100)² − 1] = 15000×(1.08² − 1) = 15000×0.1664 = 2496. Difference = 2496 − 2400 = 96. Shortcut: for 2 years, CI − SI = P×(r/100)² = 15000×0.0064 = 96.
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