Find the difference between the simple interest and the compound interest at 5% per annum for 2 years on a principal of Tk 2000.

Question: Find the difference between the simple interest and the compound interest at 5% per annum for 2 years on a principal of Tk 2000.

Solution:
We know, Simple Interest, I = pnr
and Compound Principal, C = p(1 + r)ⁿ

Simple Interest = 2000 × 2 × (5/100) = 200 Tk

Compound Principal = 2000 × (1 + 5/100)²
= 2000 × (105/100)²
= (2000 × 105 × 105)/(100 × 100)
= 2205

So, Compound interest = 2205 - 2000 = 205 Tk

So, difference = 205 - 200 = 5 Tk