The difference between the compound interest and the simple interest on a sum of ₹8,000 for 2 years at the rate of 5% p.a. is:
Answer & explanation
Correct answer: option 4
The formula used here is,
Difference in the simple interest and compound interest on a certain sum at R% per annum in 2 years = (CI - SI) = $\frac{PR^2}{100^2}$
⇒ Difference in the simple interest and compound interest on Rs.8000 at 5% per annum in 2 years = x
⇒ x = $\frac{P5^2}{100^2}$
⇒ x = 8000 x \(\frac{1}{400}\)
⇒ x = 20
Thus, The difference in CI and Si = Rs.20