Discussion of Question with ID = 075 under Compound-Interest

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Question

What is the difference in compound interest and simple interest on an amount of Rs. 20000 for a period of 2 years if the rate is 8% p.a. compounded annually?

A

Rs. 128.

B

Rs. 228.

C

Rs. 178.

D

Rs. 328.

Soln.
Ans: a

The shortcut formula for the difference between compound and simple interest over a period of 2 years is $Difference = Principal × (\text"rate"/100)^2$, which equals $(20000 × 8^2)/10000$ = Rs. 128.


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