Without using the formula, find the difference between compound interest and the simple interest on ₹ 16,000 at 9% per annum in 2 years.

Help and you will get 10 points

Without using the formula, find the difference between compound interest and the simple interest on ₹ 16,000 at 9% per annum in 2 years.

Help and you will get 10 points

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## Solution!!

Principal=Rs16000Rateofinterest=9%Time=2yearsSI=(P×R×T)/100SI = (16000 × 9 × 2)/100

SI = 160 × 9 × 2

SI=Rs2880Now, let’s find the compound interest without using the formula.

## First year:-

Principal=Rs16000Rateofinterest=9%Time=1yearSI=(P×R×T)/100SI = (16000 × 9 × 1)/100

SI = 160 × 9 × 1

SI = Rs 1440Amount=Principal+SIAmount = Rs 16000 + Rs 1440

Amount=Rs17440## Second year:-

The amount in the first year becomes the principal in the second year.

Principal=Rs17440Rateofinterest=9%Time=1yearSI=(P×R×T)/100SI = (17440 × 9 × 1)/100

SI = 156960/100

SI=Rs1569.6Amount=Principal+InterestAmount = Rs 17440 + Rs 1569.6

Amount=Rs19009.6CI=Amountinsecondyear–PrincipalinfirstyearCI = Rs 19009.6 – Rs 16000

CI=Rs3009.6We are supposed to calculate the difference between the compound interest and simple interest.

CI–SI= Rs 3009.6 – 2880

= Rs 129.6Hence, the difference between the compound interest and simple interest is Rs 129.6.

## Abbreviations used:-

P → Principal

R → Rate of interest

T → Time

SI → Simple interest

CI → Compound interest