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Question
Calculate the difference between the compound interest and the simple interest on ₹ 7,500 in two years and at 8% per annum.
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Solution
Principal (P) = ₹7500
Rate (R) = 8% p.a.
Period (T) = 2 years
∴ Simple interest =`"PRT"/100=(7500xx8xx2)/100`
= ₹1200
Interest for the first year =`(7500xx8xx1)/100`
= ₹600
∴ Amount at the end of first year = P + S.I.
= ₹7500 + ₹600
= ₹8100
Principal for the second year = ₹8100
∴ Interest for the second year =`(8100xx8xx1)/100`
= ₹648
∴ Total C.I. for 2 years = ₹600 + ₹648
= ₹1248
∴ Difference between C.I. and S.I. for 2 years
= ₹1248 − ₹1200
= ₹48
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