Question

Find the difference between the simple interest

and compound interest on 16000 at 5%
per annum at the end of one and a half year
if the interest is compounded half yearly.

Answer 1

Answer: The simple interest on 16000 at 5% per annum for 1.5 years is calculated as:

I = P * r * t

I = 16000 * 0.05 * 1.5

I = 1200

The compound interest on 16000 at 5% per annum compounded half yearly for 1.5 years is calculated as:

A = P * (1 + r/n)^(nt)

A = 16000 * (1 + 0.05/2)^(2 * 1.5)

A = 16000 * (1.0253)^3

A = 16000 * 1.07897

A = 17253.576

The difference between the compound interest and simple interest is:

17253.576 - 1200 = 16053.576

So the difference between the simple interest and compound interest is 16053.576.

Explanation: