#### Question

Find the difference between simple interest and compound interest on ₹20000 at 8 p.c.p.a.

#### Solution

Disclaimer: In the question "Time" is not given. So the question is solved taking time as 2 years, because simple interest and compound interest will be same for one year.

Here, P = Principal = ₹ 20000

R = 8 %

N = 2 years

Simple interest = `("P" xx "R" xx "N")/100`

= `(20000 xx 8 xx 2)/100`

= 3200

Amount = `"P" (1 + "R"/100)^"N"`

= 20000 `(1 + 8/100)^2`

= 20000 `(1 + 2/25)^2`

= 20000 `(27/25)^2`

= 23328

Compound interest = 23328 - 20000

= 3328

Compound interest - Simple interest = 3328 - 3000

= 128

Hence, the difference between simple interest and compound interest is ₹ 128.