Calculate the difference between the compound interest and the simple interest on a sum of ₹5,000 at the rate of 8% for 3 years. (to nearest ₹)

₹99

We know ,

Simple Interest = \(\frac{Principal ×Rate × Time }{100}\)

= \(\frac{5000  × 8 × 3 }{100}\)

= Rs. 1200

Compound Interest = Principal × ( 1 + \(\frac{Rate }{100}\))t - Principal

= 5000 × ( 1 + \(\frac{8 }{100}\))³ - 5000

= 5000 × \(\frac{27}{25}\) × \(\frac{27 }{25}\) × \(\frac{27 }{25}\) - 5000

= 6298.56 - 5000

= 1298.56

Now , Difference b/w CI and SI = 1298.56 - 1200 = 98.56

= Rs.99 ( approx )