Multiple choice

What will be the diiference of simple and compound interest on Rs.2880 after three years at the rate of 10% p.a?

  1. Rs. 62

  2. Rs. 91.24

  3. Rs. 67.50

  4. Rs. 89.28
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Simple Interest = P × R × T = 2880 × 0.10 × 3 = Rs. 864. Compound Interest = P(1 + r)^t - P = 2880(1.1)³ - 2880 = 2880 × 1.331 - 2880 = 3833.28 - 2880 = Rs. 953.28. Difference = 953.28 - 864 = Rs. 89.28. The difference grows each year as compound interest earns interest on interest.

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