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Sita deposited Rs. 5,000 at 10% simple interest for 2 years. How much more money will Sita have in her account at the end of two years, if it is compound semi-annually at 20% rate?
- ARs. 50
- BRs. 1250
- CRs. 1320.50
- DRs. 1885.50
Answer not set
Discussion 1
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CCommunity
Given,
Let P = Principal, R = rate % per annum, Time = n years.
Simple interest = (PNR)/100
Given,
P = Rs. 5000, R = 10% and N = 2
Simple interest
= (5000 × 10 × 2)/100
= 1000
Simple interest is Rs. 1000.
When interest is compound semi - annually,
Amount = P(1 + R/100)2n
Given,
P = Rs. 5000, R = 10% and N = 2
Amount
= 5000[1 + 10/100]4
= 5000[1.1]4
= 5000 × 1.1 × 1.1 × 1.1 × 1.1
= 7320.5
Compound interest
= amount - P
= 7320.5 - 5000
= 2320.5
Compound interest is Rs. 2320.5
Difference between compound interest and simple interest
= 2320.5 - 1000
= 1320.5
∴ Rs. 1320.5 more money Sita will save.
Let P = Principal, R = rate % per annum, Time = n years.
Simple interest = (PNR)/100
Given,
P = Rs. 5000, R = 10% and N = 2
Simple interest
= (5000 × 10 × 2)/100
= 1000
Simple interest is Rs. 1000.
When interest is compound semi - annually,
Amount = P(1 + R/100)2n
Given,
P = Rs. 5000, R = 10% and N = 2
Amount
= 5000[1 + 10/100]4
= 5000[1.1]4
= 5000 × 1.1 × 1.1 × 1.1 × 1.1
= 7320.5
Compound interest
= amount - P
= 7320.5 - 5000
= 2320.5
Compound interest is Rs. 2320.5
Difference between compound interest and simple interest
= 2320.5 - 1000
= 1320.5
∴ Rs. 1320.5 more money Sita will save.