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Find the difference between Compound Interest and Simple Interest on Rs 45,000 at 12% per annum for 5 years

Solution:

The simple Interest (SI)for P = Rs. 45000, r = 12% and years(n) = 5 is calculated as shown below:

SI = (P × r × n)/100 = (45000 × 12 × 5)/100 = Rs. 27000

Compound Interest (CI) is calculated using the formula:

A = P(1 + r/100)ⁿ

A = 45000(1 + 12/100)⁵ = 45000(1.12)⁵ = 45000(1.762) = Rs. 79,305.38

CI = A - P = 79,305.38 - 45000 = Rs. 34,305.38

The difference of CI and SI = Rs. 34,305.38 - Rs. 27000 = Rs. 7305.38

✦ Try This: Find the difference between Compound Interest and Simple Interest on Rs 50,000 at 10% per annum for 4 years.

The simple interest (SI) for P = Rs.50000, r = 10% and years(n) = 5 is calculated as shown below:

SI = (P × r × n)/100 = (50,000 × 10 × 4)/100 = Rs. 20,000

Compound Interest (CI) is calculated using the formula:

A = P(1 + r/100)ⁿ

A = 50,000(1 + 12/100)⁴ = 50,000(1.10)⁴ = 50,000(1.464) = Rs. 73,205

CI = A - P = 73,205 - 50000 = Rs. 23,205

The difference of CI and SI = Rs. 23.205 - Rs. 20,000 = Rs. 3,205

☛ Also Check: NCERT Solutions for Class 8 Maths

NCERT Exemplar Class 8 Maths Chapter 9 Problem 89

Summary:

The difference between Compound Interest and Simple Interest on Rs 45,000 at 12% per annum for 5 years is Rs. 7305.38

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