What is the difference between simple and compound interest at 8% per annum on a sum of Tk. 12,500 at the end of 2 years?

Question: What is the difference between simple and compound interest at 8% per annum on a sum of Tk. 12,500 at the end of 2 years?

Solution:
Here,
Principal, P = 12500 Tk.
Interest Rate, R = 8%
Time, T = 2 years

We know,
Simple Interest, SI = PRT/100
= (12500 × 8 × 2)/100
= 200000/100
= 2000 Tk.

For Compound Interest,
Amount, A = P{1 + (R/100)}^T
= 12500{1 + (8/100)}²
= 12500(1.08)²
= 12500 × 1.1664
= 14580 Tk.

∴ CI = A - P
= 14580 - 12500
= 2080 Tk.

∴ Difference between compound interest and simple interest,
= 2080 - 2000
= 80 Tk.