Question
Download Solution PDFThe difference between the compound interest, compounded annually and the simple interest if ₹17,700 is deposited at 4% rate of interest per annum for 2 years is:
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFGiven:
Principal (P) = ₹17,700
Rate of Interest (r) = 4% per annum
Time (t) = 2 years
Formula used:
Simple Interest (SI) = (P × r × t) / 100
Compound Interest (CI) = P × (1 + r/100)t - P
Difference between CI and SI = CI - SI
Calculations:
Simple Interest (SI):
SI = (17700 × 4 × 2) / 100
⇒ SI = (141600) / 100
⇒ SI = ₹1,416
Compound Interest (CI):
CI = 17700 × (1 + 4/100)2 - 17700
⇒ CI = 17700 × (1.04)2 - 17700
⇒ CI = 17700 × 1.0816 - 17700
⇒ CI = 19144.32 - 17700
⇒ CI = ₹1,444.32
Difference between CI and SI:
Difference = CI - SI
⇒ Difference = 1444.32 - 1416
⇒ Difference = ₹28.32
∴ The correct answer is option (3).
Last updated on Jul 17, 2025
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