A man invests Rs 6000 in a bank at a simple interest rate of 5% per annum. Another man invests Rs 5000 at an 8% per annum compound interest rate. What is the difference between the interest amounts earned by them after 2 years?

Explanation

Calculate the simple interest for the first man: SI = 6000 × 5/100 × 2 = Rs 600. For the second man, calculate compound interest: CI = 5000 × (1 + 8/100)^2 – 5000 = 5000 × (1.08)^2 – 5000 = 5000 × 1.1664 – 5000 = Rs 832. The difference between compound and simple interest is Rs 832 – Rs 600 = Rs 232.