Question

Find the difference between compound interest and simple interest on Rs. 12,000 and in `1 1/2` years at 10% compounded half-yearly.

Answer 1

Given : P = Rs. 12,000 ; n =  `1 1/2` years and r = 10%

S.I. = `[ P xx R xx T ]/100  = [12,000 xx 10 xx 3/2 ]/100  = Rs. 1,800`

To calculate C.I. ( Compound half - yearly ) :
P = Rs. 12,000; n = `1 1/2` years  and r = 10%

A = `"P"( 1 + r/[ 2 xx 100 ])^(n xx 2)` 

A = `12,000( 1 + 10/[ 2 xx 100 ])^(3/2 xx 2)` 

A = `12,000( 21/20)^(3)` 

A = Rs. 13,891.50

C.I. = Rs. 13,891.50 - Rs. 12,000 = Rs. 1,891.50

∴ Difference between C.I. and S.I = Rs. 1,891.50 - Rs. 1,800 = Rs. 91.50.