A person deposited a sum of of Rs 6000 in a bank at 5% per annum simple interest. Another person deposited Rs 5000 at 8% per annum compound interest. After two years, the difference of their interest will be = ?

Explanation:-

$$\eqalign{ & {\text{Principal (}}{{\text{P}}_1}{\text{) = Rs 6000}} \cr & {\text{Time (t) = 2 years}} \cr & {\text{Rate % = 5% }} \cr & {\text{Simple interest}} \cr & {\text{ = }}\frac{{6000 \times 5 \times 2}}{{100}}{\text{ = Rs 600}} \cr & {\text{Principal (}}{{\text{P}}_2}{\text{) = Rs 5000}} \cr & {\text{Time (t) = 2 years}} \cr & {\text{Rate % = 8% }} \cr}$$ 2 year effective rate for Compound interest $$\eqalign{ & {\text{ = 5000}} \times \frac{{16.64}}{{100}}{\text{ = Rs 832}} \cr & {\text{Difference}} \cr & {\text{ = Rs }}\left( {832 - 600} \right) \cr & = {\text{Rs}}232 \cr}$$