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Find the difference between the compound and simple interest on a sum of Rs. 25000 over a 2 year period if the compound interest is calculated at 20% and simple interest is calculated at 23%.
- ARs. 500
- BRs. 1000
- CRs. 2000
- DRs. 250
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CCommunity
Since compound interest is calculated at 20%
⇒ Cumulative compound interest for 2 years = 20 + 20 + [20 × 20] /100 = 44%
Since simple interest is calculated at 23%
⇒ Cumulative simple interest for 2 years = 23 + 23 = 46%
⇒ Difference in the interest rate = 46 - 44 = 2%
∴ Difference between the compound and simple interest = [25000 × 2] /100 = Rs. 500
⇒ Cumulative compound interest for 2 years = 20 + 20 + [20 × 20] /100 = 44%
Since simple interest is calculated at 23%
⇒ Cumulative simple interest for 2 years = 23 + 23 = 46%
⇒ Difference in the interest rate = 46 - 44 = 2%
∴ Difference between the compound and simple interest = [25000 × 2] /100 = Rs. 500