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Question
Find the difference between simple and compound interest on Rs 5000 invested for 3 years at 6% p.a., interest payable yearly.
Solution
Case I :
Here P1 = Rs.5000 and r = 6%
So, Amount after 1 year
= `"P"(1 + "r"/100)`
= `5000(1 + 6/100)`
= `5000 xx (106)/(100)`
= 5300
Amount after 2 year
= `"P"(1 + "r"/100)`
= `5300(1 + 6/100)`
= `5300 xx (106)/(100)`
= 5618
Thus, P3 = Rs.5618 and r = 6%
Amount after 3 year
= `"P"(1 + "r"/100)`
= `5618(1+ 6/100)`
= `5618 xx (106)/(100)`
= 5955.08
Hence, Amount = Rs.5955.08
Also, C.I.
= A - P
= Rs.5955.08 - Rs.5000
= Rs. 955.08
Case II :
Simple interest = `(5000 xx 6 xx 3)/(100)`
= 900
Difference between C.I. and S.I.
= Rs.955.08 - Rs.900
= Rs.55.08.
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