A man deposited Rs. 6000 in a bank at 5% simple interest. Another man deposited Rs. 5000 at 8% compound interest. After 2 years, find the difference between their interests.

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Rs. 232

Rs. 320

Rs. 230

Rs. 323

answer is A.

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Detailed Solution

Concept- We simply have to use the formulas of compound interest and simple interest as shown below.
In case of Compound Interest,

Where, A = Final Amount i.e., (Principle + Interest).
P = Principle on which Interest in compounded
R = Rate of Compound Interest per annum
n = Time period of interest
Therefore, to calculate the interest amount, we have to operate on
(A – Principle) after we have calculated A.
Simple Interest =

Where, P = Principle on which Interest in compounded
R = Rate of Simple Interest per annum
T = Time period of interest.
Then ultimately, we just have to subtract both the interests
Step-by-step explanation is as follows.
For the Compound Interest,
Given is P = Rs. 5000
R = 8%
n = 2 Years
Therefore,

Interest Amount = Rs. (5832 – 5000)
= Rs. 832
For the Simple Interest,
Given is P = Rs. 6000
R = 5%
n = 2 Years
Therefore,
Interest =

Interest = 60×5×2
Interest = 60×10
Interest = Rs. 600
Therefore, difference in the Interest amounts of CI and SI = Rs. (832 – 600) = Rs. 232
Hence, the correct answer is option 1) Rs. 232.

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