Find the difference between the simple interest and compound interest on rupees 2500 for 2 years at 4% per annum, compound interest being reckoned semi annually.

Dear student
FOR SIMPLE INTEREST :Principal, P = Rs 2500Rate, R = 4% p.a.Time, T = 2 yrsNow, SI = PRT100 = 2500×4×2100 = Rs 200FOR COMPOUND INTEREST :Principal, P = Rs 2500Rate, R = 4% p.a. = 2 % per half yearTime, n= 2 yrs = 4 half yrsNow, A = P1+R100n = 25001+21004 = 2500×51504 = Rs 2706.0804Now, CI = A - P = 2706.0804 - 2500 = Rs 206.0804Now, CI - SI = 206.0804 - 200 = Rs 6.08
Regards

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Simple interest is based on the principal amount of a loan or deposit, whilecompound interest is based on the principal amount and the interest that accumulates on it in every period. Since simple interest is calculated only on the principal amount of a loan or deposit, it's easier to determine than compound interest.
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