Calculate the difference between the compound interest and the simple interest on a sum of ₹5,000 at the rate of 8% for 3 years. (to nearest ₹)
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. ₹99
According to question,
Now by using the formulae,
Simple interest = (5000 × 8 × 3)/100 = 1200,
compound interest = 5000 (1 + 8/100)3 - 5000
= 5000 × (27/25)3 - 5000
= 6298.56 - 5000
= 1298.56 ≈ 1299
Difference between simple interest and compound interest,
⇒ 1299 – 1200 = Rs.99