Calculate the difference between the Simple Interest and the Compound Interest on ₹4000 in 2 years at 8 % per annum compounded half yearly.

 Calculate the difference between the Simple Interest and the Compound Interest on ₹4000 in 2 years at 8 % per annum compounded half-yearly.

Compound Interest

For 1st Year

               Principle =  4000

                     Time  =  1 year

    Rate of Interest =   8 %

Interest = Principle × Time × Rate              

                                100

Interest =  4000 × 1 × 8

                        100

Interest = ₹320

Amount = Principle + Interest

               =  ₹4000 + ₹320

Amount =  ₹4320

    For 2nd Year

               Principle = ₹4320

    

                      Time = 1 year

    Rate Of Interest =  8 % 

Interest =  Principle × Time × Rate

                                 100

Interest =  4320 × 1 × 8    

                        100   

Interest =  ₹345.60

Amount = Principle + Interest

 

               =  ₹4320 + ₹345.60

               =  ₹4665.60

Now,

 Compound Interest = Amount - Principle

                                   = ₹4665.60 - ₹4000

                                   = ₹665.60

Simple Interest 

                  Principle = ₹4000

                         Time = 2 years

       Rate of Interest = 8 %  

 Interest = Principle × Time × Rate

                                 100

Interest =   4000 × 2 × 8

                          100

 Simple Interest =  ₹640

Difference between Simple Interest and Compound Interest 

                                                

                             = ₹665.60 - ₹640

     

                             = ₹25.60