Consumer Arithmetic >> Interest

Difference between compound interest and simple interest - Interest - Consumer Arithmetic problem solver

Ramesh wants to invest the 10000 dollar (principal) in a bank which pays 6 % interest rate per annum for 2 years terms. He is not able to decide whether to invest in compound interest or simple interest . Find the difference between them. Kindly advise him.


principal = 10000
rate = 6
terms = 2
CI =  pow( P * ( 1 + ( r / 100 ) ), n ) - P
compound interest = pow( 10000 * ( 1 + ( 6 / 100 ) ), 2 ) - 10000
compound interest = 112350000
So the compound interest is 112350000
SI =  ( P * n * r ) / 100
simple interest = ( 10000 * 2 * 6 ) / 100
simple interest = 1200
So the simple interest is 1200
compound interest = 112350000
simple interest = 1200
d =  CI - SI
difference = 112350000 - 1200
difference = 112348800
So the difference is 112348800

Interest Formulas :

CI =  pow( P * ( 1 + ( r / 100 ) ), n ) - P

SI =  ( P * n * r ) / 100

d =  CI - SI

P =  P - m

tc =  P + SI

m =  tc - P

mp =  ( m * 100 ) / tc

emi =  tc / ( n * 12 )


where,

CI = compound interest
P = principal
r = rate
n = terms
SI = simple interest
d = difference
tc = total cost
m = margin
mp = margin percentage
emi = emi

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