# The difference between simple interest and compound interest for a sum of Rs. 12,000 lent at 10% per annum in 2 years, is

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The difference between simple interest and compound interest for a sum of Rs. 12,000 lent at 10% per annum in 2 years, is
1. Rs. 80
2. Rs. 90
3. Rs. 120
4. Rs. 100

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Correct Answer - Option 3 : Rs. 120

Given:

Principal = Rs. 12000

Rate = 10%

Time = 2 years

Formula used:

SI = (P × R × T)/100

Calculation:

SI = (12000 × 10 × 2)/100

⇒ 2400

CI for the first year = (12000 × 10 × 1)/100

⇒ 1200

CI for the second year = (13200 × 10 × 1)/100

⇒ 1320

CI = (1200 + 1320) = 2520

Difference between SI and CI = (2520 – 2400) = 120

∴ Required difference is Rs. 120