What is the difference between the simple interest and compound interest on Rs. 1200 for one year at an annual rate of 10%, compounded semi-annually?

Explanation

To find the difference between compound interest (compounded half-yearly) and simple interest for one year on Rs. 1200 at 10% per annum: Simple Interest (SI) = (1200 × 10 × 1) / 100 = Rs. 120 Compound Interest (CI) with half-yearly compounding: Rate per half year = 10% / 2 = 5% Amount = 1200 × (1 + 0.05)^2 = 1200 × 1.1025 = Rs. 1323 CI = 1323 - 1200 = Rs. 123 Difference = CI - SI = 123 - 120 = Rs. 3