If the simple interest is 10.5% annual and compound interest is 10% annual, find thedifference between the interest after 3 years on a sum of Rs. 1000.
Question
If the simple interest is 10.5% annual and compound interest is 10% annual, find thedifference between the interest after 3 years on a sum of Rs. 1000.
Solution
To solve this problem, we first need to calculate the simple interest and the compound interest separately, and then find the difference between them.
Step 1: Calculate Simple Interest The formula for simple interest is I = PRT/100, where P is the principal amount, R is the rate of interest, and T is the time in years. So, I = 1000 * 10.5 * 3 / 100 = Rs. 315
Step 2: Calculate Compound Interest The formula for compound interest is A = P(1 + R/100)^T, where A is the amount after T years, P is the principal amount, R is the rate of interest, and T is the time in years. The compound interest is then A - P. So, A = 1000 * (1 + 10/100)^3 = Rs. 1331 The compound interest is then 1331 - 1000 = Rs. 331
Step 3: Find the Difference The difference between the compound interest and the simple interest is 331 - 315 = Rs. 16. So, the difference between the interest after 3 years on a sum of Rs. 1000 is Rs. 16.
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