What is the difference between the compound interest and the simple interest on a sum of Rs. 4500 for 3 years at the rate of 8% per annum?

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RRC Group D Previous Paper 3 (Held On: 19 Sep 2018 Shift 1)
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  1. Rs. 87.70
  2. Rs. 87.50
  3. Rs. 85.70
  4. Rs. 88.70

Answer (Detailed Solution Below)

Option 4 : Rs. 88.70
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Detailed Solution

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Here P = 4500 , T = 8 , R = 8%                                                   

Simple interest = (P × R × T)/100, where P is the principal, R is the rate of interest and T is the time period.

Compound interest = [P (1 + R/100)n] - P, where P is the principal, R is the rate of interest and n is the time period.

⇒ SI = (4500 × 8 × 3)/100 = Rs. 1080

⇒ CI = [4500 (1 + 8/100)3] - 4500 = Rs. 5668.7 - 4500 = 1168.7

∴ Required difference = Rs. 88.70

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