Multiple choice

What will be the difference between simple interest and compound interest in 3 years at the rate of 8% annual interest on Rs. 4500?

  1. Rs. 85.70

  2. Rs. 87.70

  3. Rs. 87.50

  4. Rs. 88.70
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Simple Interest = 4500 × 8% × 3 = Rs. 1080. Compound Interest = 4500(1.08)^3 - 4500 = Rs. 1168.70. The difference is Rs. 88.70. Compound interest earns interest on accumulated interest each year, creating a growing gap with simple interest.

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