Question

Find the difference between C.I and S.I on ₹ 5000 for 1 year at 2% p.a, if the interest is compounded half yearly

Answer 1

Principal (P) = ₹ 5000

Time period (n) = 1 year

Rate of interest (r) = 2% p.a

For half-yearly r = 1%

Difference between C.I and S.I is given by the formula

C.I − S.I = `"P"("r"/100)^(2"n")`  ...[For half yearly compounding]

∴ C.I − S.I = `5000(1/100)^(2 xx 1)`

= `5000 xx 1/100 xx 1/100`

= ₹ 0.50