The difference between simple and compound in | vedclass

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Question

(C) Let the principal sum be $P$.For $2$ years,the simple interest $(SI)$ is given by $SI = \frac{P 	imes R 	imes T}{100} = \frac{P 	imes 4 	imes

Vedclass · Accepted Answer

$5000$

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(C) Let the principal sum be $P$.For $2$ years,the simple interest $(SI)$ is given by $SI = \frac{P 	imes R 	imes T}{100} = \frac{P 	imes 4 	imes 2}{100} = 0.08P$.The compound interest $(CI)$ compounded annually is given by $CI = P(1 + \frac{R}{100})^T - P = P(1 + \frac{4}{100})^2 - P = P(1.04)^2 - P = P(1.0816) - P = 0.0816P$.The difference between $CI$ and $SI$ is $0.0816P - 0.08P = 0.0016P$.Given that the difference is ₹ $8$,we have $0.0016P = 8$.$P = \frac{8}{0.0016} = \frac{80000}{16} = 5000$.Thus,the sum is ₹ $5000$.

The difference between simple and compound interest compounded annually on a certain sum of money for $2$ years at $4 \%$ per annum is ₹ $8$. The sum is (In ₹):

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