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The difference between compound and simple interest at 5% per annum for 4years on Rs. 20,000 is -(a) 250(b) 277(c) 300(d) 310

Question

The difference between compound and simple interest at 5% per annum for 4years on Rs. 20,000 is -(a) 250(b) 277(c) 300(d) 310

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Solution

To find the difference between compound and simple interest, we first need to calculate both separately.

  1. Simple Interest: The formula for simple interest is PRT/100, where P is the principal amount, R is the rate of interest, and T is the time in years. So, Simple Interest = (2000054)/100 = Rs. 4000

  2. Compound Interest: The formula for compound interest is P(1 + R/100)^T - P, where P is the principal amount, R is the rate of interest, and T is the time in years. So, Compound Interest = 20000(1 + 5/100)^4 - 20000 = Rs. 4320

  3. Difference: The difference between compound and simple interest is Rs. 4320 - Rs. 4000 = Rs. 320

So, none of the options given in the question are correct. The difference between compound and simple interest at 5% per annum for 4 years on Rs. 20,000 is Rs. 320.

This problem has been solved

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