For three years, Tk 40,000 is invested at a 10% yearly interest rate.
What is the difference between the Compound Interest (CI) and the Simple Interest (SI)?

Question: For three years, Tk 40,000 is invested at a 10% yearly interest rate. What is the difference between the Compound Interest (CI) and the Simple Interest (SI)?

Solution:
Given:
Principal (P) = Tk. 40,000
Rate of Interest (r) = 10% per annum
Time (n) = 3 years

Simple Interest, I = Pnr
= 40000 × 3 × (10/100)
= 12000

Compound Principal = P × (1 + r)ⁿ
= 40000 × (1 + (10/100))³
= 40,000×(1.1)³
= 53240

Compound Interest, C = 53240−40000 = 13240

So, Difference = 13240 - 12000 = 1240 Taka