Question:
Suppose for the principal P, rate R% and time T, the simple interest is S and compound interest is C. Consider the possibilities
(i) C>S
(ii) C = S
(iii) C
(a) only (i) is correct
(b) either (i) or (ii) is correct
(c) either (ii) or (iii) is correct
(d) only (iii) is correct
Solution:
(a) only (i) is correct.
Explanation: Let Principal, P = Rs. 100, Rate = 10% and Time = 1 year
Simple interest (SI)= (P×R×T)/100 = (100×10×1)/100 = Rs.10
Since, Amount = P(1+R/100)T=100(1+10/100)1= 100(11/10) = Rs. 110
Compound interest (CI) = Amount – Principal = 110 -100 = 10
So, CI>SI
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