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Question
Calculate the difference between the compound interest and the simple interest on ₹ 8,000 in three years and at 10% per annum.
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Solution
Principal (P) = ₹8000
Rate (R) = 10% p.a.
Period (T) = 3 years
∴ S.I. for 3 years =`"PRT"/100=(8000xx10xx3)/100`
= ₹2400
Now, S.I. for 1st year =`₹(8000xx10xx1)/100`
= 80 × 10 × 1
= ₹800
Amount for the first year = P + S.I.
= ₹8000 + ₹800
= ₹8800
Principal for the second year = ₹8800
Interest for the second year =`(8800xx10xx1)/100`
= ₹880
∴ Amount after second year = ₹8800 + ₹880
= ₹9680
Principal for the third year = ₹9680
Interest for the third year
`=₹(9680xx10xx1)/100`
= ₹968
∴ C.I. for 3 year = ₹800 + ₹880 + ₹968
= ₹2648
∴ Differeence between C.I. and S.I. for 3 year
= ₹2648 − ₹2400
= ₹248
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