Find the difference between simple interest and compound interest on ₹ 20000 at 8 p.c.p.a.

Principal = 20000/-, Rate = 8% (p.c.p.a), Duration (n) = n years

For the first year, compound interest and simple interest will be same, so it will vary from second year, therefore assuming the duration as 2 years in the same case.

A = 20000 (1+0.08)²

A = 20000 (1.08)²

A = 20000 (1.1664)

∴ A = 23328/-

∵ C.I. = A - P

C.I. = 23328 – 20000

C.I. = 3328/-

S.I. = 3200/-

∴ Difference = C.I. – S.I.

Difference = 3328 – 3200

Difference = 128 /-

∴ The difference between simple interest and compound interest is 128/- .