The difference between the simple interest and compound interest on ₹1,000 for 1 year at 20% per annum, compounded half-yearly, is:
Answer & explanation
Correct answer: option 3
The Formula that we used here is -
C. I.= P$(1 \;+\; \frac{R}{100})^t$ - P
Interest is compounded half yearly,
New rate = \(\frac{20}{2}\)% = 10%
= 1000 [ 1 + \(\frac{10}{100}\)]² - 1000
= 1000 × \(\frac{11}{10}\) × \(\frac{11}{10}\) - 1000
= 1000 [ \(\frac{21}{100}\) ]
= 210
ATQ,
Simple interest = \(\frac{P × R × T}{100}\)
= \(\frac{1000 × 20 × 2}{100}\)
= 200
Required difference = 210 - 200 = Rs.10