Multiple choice

The difference between compound interest and simple interest on Rs. 4500 for 3 years at 4% per annum is-

  1. Rs.20.926

  2. Rs.21.888

  3. Rs.19.629

  4. Rs.17.692
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

For P = 4500, r = 4%, n = 3 years. SI = P × r × n / 100 = 4500 × 4 × 3 / 100 = Rs. 540. CI = P[(1 + r/100)^n - 1] = 4500[(1.04)^3 - 1] = 4500[1.124864 - 1] = 4500 × 0.124864 = Rs. 561.888. Difference = 561.888 - 540 = Rs. 21.888. Option B is correct.

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