Ravi invested Rs. 25,000 in two schemes for 3 years. Both schemes offer 12% p.a. interest. One gives simple interest and the other gives compound interest (compounded annually). Find the difference between the interests earned from both schemes.
Show answer & explanation
Correct answer: A
Explanation
Given:
Principal (P) = ₹25,000
Rate (R) = 12% per annum
Time (T) = 3 years
By the formula:
SI = (P × R × T) / 100
CI = P(1 + r/100)ᵀ − P
SI = (25,000 × 12 × 3) / 100 = 9,000
A = 25,000(1 + 12/100)³ = 25,000(1.12)³
= 25,000 × 1.404928 = 35,123.2
CI = 35,123.2 − 25,000 = 10,123.2
Difference = 10,123.2 − 9,000 = 11,23.2
Interest difference = 1123.2 rupees