A person invested Rs. 18,000 each in two different schemes for 2 years. One scheme offered 15% p.a. simple interest and the other offered 15% p.a. compound interest, compounded annually. Find the difference between the interest earned from both schemes.
Show answer & explanation
Correct answer: B
Explanation
Given:
Investment in each scheme = ₹18,000
Time = 2 years
Simple interest rate = 15%
Compound interest rate = 15% (annual)
Formula:
Simple interest = (P × R × T) / 100
Simple interest = (18,000 × 15 × 2) / 100 = 5400
Compound amount = P(1 + R/100)ᵗ
A = 18,000(1 + 15/100)²
= 18,000(1.15)² = 23,805
Compound interest = 23,805 − 18,000 = 5805
Difference between the two interest rates = 5805 − 5400 = ₹405