Find the difference between CI and SI on sum of ₹ 4800 for 2 years at 5% per annum payable yearly.
Solution:
It is given that
Principal (P) = ₹ 4800
Rate of interest (r) = 5% p.a.
Period (n) = 2 years
We know that
SI = Prt/100
Substituting the values
= (4800 × 5 × 2)/ 100
= ₹ 480
If compounded yearly
A = P (1 + r/100)n
Substituting the values
= 4800 (1 + 5/100)2
By further calculation
= 4800 × 21/20 × 21/20
= ₹ 5292
Here
CI = A – P
Substituting the values
= 5292 – 4800
= ₹ 492
So the difference between CI and SI = 492 – 480 = ₹ 12
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