Answer to Question #296734 in Financial Math for Md. Mamun

Question

TK. 10,000 is invest for 4 years at 5% interest. What will be the difference between simple interest and compound interest in the case?

please answer

Answer 1

Amount, $A=P(1+r/100)^n=10000(1+5/100)^4=\$12155.0625$

Interest $=12155.0625-10000=\$2155.0625$

Simple interest, $I=\frac{PRT}{100}=\frac{10000\times 5 \times 4}{100}=\$2000$

Difference =$2155.0625-2000=\$155.0625$