What is the difference between simple and compound interest at 10% per annum on a sum of Tk. 5,000 at the end of 2 years?

A

Tk. 40

B

Tk. 60

C

Tk. 70

D

Tk. 50

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Question: What is the difference between simple and compound interest at 10% per annum on a sum of Tk. 5,000 at the end of 2 years?

Solution:
Principal (P) = Tk. 5,000
Rate (R) = 10% per annum
Time (T) = 2 years

Simple Interest (SI):
SI = (P × R × T)/100
= (5000 × 10 × 2) / 100
= 100000/100
= Tk. 1000

Compound Interest (CI):
Amount (A) = P × (1 + R/100)T
= 5000 × (1 + 10/100)2
= 5000 × (1.1)2
= 5000 × 1.21
= Tk. 6050

CI = A - P = 6050 - 5000
= Tk. 1050

Difference between CI and SI = 1050 - 1000
= Tk. 50

 

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Updated: 8 hours ago

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