The difference between simple interest and compound interest on a sum for 2 years at 8%, when the interest is compounded annually is Rs.16. If the interest were compounded half yearly, then what would be the difference between simple interest and compound interest for the same sum in 2 years?
Solution -
the difference between the compound interest and simple interest for 2 yearsmay be arrived in the form PxRXR/10000.
R=8,solving get P=2500
Simple interest for the amount=400
comp interest =416
comp interest half-yearly =424.65
hence difference =24.65
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