Difference between compound interest and simple interest on ₹ 4000 at 5 % per annum for 2 years?

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6.Interest

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What is the difference between the compound interest and simple interest on ₹ $4000$ at $5 \%$ per annum for $2$ years?

A

$10$

B

$11$

C

$20$

D

$100$

Solution

(a) Compound amount

$=4000\left(1+\frac{5}{100}\right)^{2}=₹ 4410$

Simple interest $=\frac{4000 \times 5 \times 2}{100}=₹ 400$

Compound interest $=A-P$ $=₹(4410-4000)=₹ 410$

$\therefore \quad$ Difference in $CI$ and $SI$

$=410-400=₹ 10$

Quicker Method:

Difference $=\operatorname{Sum}\left(\frac{r}{100}\right)^{2}=4000\left(\frac{5}{100}\right)^{2}$

$=\frac{4000}{400}=₹ 10$

Standard 13

Quantitative Aptitude

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