Question

Ahmed lent amir Rs8000 at simple interest for 3 years at the rate of 5% per annum. How much more would he have gained if he had lent it at compound interest?

Answer 1

Ahmed could have gained 61 rupees more, if had given had given in compound interest.

Solution:

Given that Ahmed lent amir Rs8000 at simple interest for 3 years at the rate of 5% per annum

Simple Interest calculation:

Principal = 8000

Rate of interest = 5%

Time = 3

Formula:

$S.I=\frac{p\times n\times r}{100}$

Where , "p" is the principal and "n" is the number of years and "r" is the rate of interest

Substituting the values in formula,

$S.I = \frac{8000 \times 3 \times 5}{100}\\\\S.I = 80 \times 3 \times 5 = 240 \times 5\\\\S.I = 1200$

Compound Interest calculation:

Principal = 8000

Rate of interest = 5% compounded annually

Time = 3

Formula:

$C.I=P(1+\frac{R}{100})^n-P$

Substituting the values in formula,

$\Rightarrow C.I=8000(1+\frac{5}{100})^3-8000\\\\\Rightarrow C.I=9261-8000\\\\\Rightarrow C.I=1261$

Therefore, the difference between the interests:

1261 - 1200 = 61

Thus he could have gained 61 rupees more, if had given had given in compound interest.