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A person invests Rs10,000 at the rate of 10% per annum for 2 years on simple interest. How much more interest will be earned
if he his paid compound interest instead of simple interest,interest being compounded annually?
Rs1,000
Rs4,100
Rs2,100
Rs1
- Simple Interest is calculated using the formula:
SI=P×R×T100
where P=10,000, R=10%, T=2 years.
SI=10,000×10×2100=2,000
- Compound Interest is calculated using the formula:
Amount=P(1+R100)T
CI=Amount−P
Amount=10,000(1+10100)2=10,000×1.21=12,100
CI=12,100−10,000=2,100
- Difference in Interest:
Difference=2,100−2,000=100
- Option:1 - Rs1,000
- Option:2 - Rs4,100
- Option:3 - Rs2,100
- Option:4 - Rs1
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