The difference in Taka between simple and compound interest at 10% annually on a sum of Tk. 8,000 after 2 years is:

Question: The difference in Taka between simple and compound interest at 10% annually on a sum of Tk. 8,000 after 2 years is:

Solution:
Given that,
Principal, P = Tk. 8,000
Rate, r = 10%
Time, n = 2 years

We know that,
Simple Interest = Pnr/100
= (8000 × 2 × 10)/100
= 1600 Tk.

And Compound Interest = P(1 + r/100)ⁿ - P
= 8000(1 + 10/100)² - 8000
= 8000(11/10)² - 8000
= 8000(1.21) - 8000
= 9680 - 8000
= 1680 Tk.

∴ Difference = 1680 - 1600 = 80 Tk.
The difference between compound and simple interest is Tk. 80.