Multiple choice

What is the difference between the compound interest and simple interest on Rs. 9000 at the rate of 8% per annum for 3 years?

  1. Rs. 175.408

  2. Rs. 177.408

  3. Rs. 156.308

  4. Rs. 179.348
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Simple Interest = 9000 × 8 × 3 / 100 = Rs. 2160. Compound Interest = 9000[(1 + 0.08)^3 - 1] = 9000[1.259712 - 1] = Rs. 2337.408. The difference is Rs. 2337.408 - Rs. 2160 = Rs. 177.408. Compound interest is always greater than simple interest for the same principal, rate, and time because interest earns interest on accumulated interest.

Keep practicing — related questions