3. Fabina borrows : 12,500 at 12% per annum for 3 years at simple interest a
Radha borrows the same amount for the same time period at 10% per annu
compounded annually. Who pays more interest and by how much?
Answers
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Given:
→ Fabiana borrows ₹ 12,500 at 12% per annum for 3 years at simple interest and Radha borrows the same amount for the same time period at 10% per annum, compounded annually.
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Find:
→ Who pays more interest and by how much?
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Using formula:
→ S.I = (Principal × Rate × Time)/100
→ A = Principal (1 + Rate/100)ⁿ
→ C.I = Amount - Principal
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Note:
→ (ⁿ) = Number of years or Time period.
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Calculations:
★ Finding for Radha:
→ (12500 × 12 × 3)/100
→ 450000/100
→ 4500
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★ Finding for Fabina:
→ 12500 × (1 + 10/100)³
→ 12500 × (11/10)³
→ {12500 (11 × 11 × 11)}/1000
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→ 125 × 1331/10
→ 166375/10
→ 16637.5
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★ Amount paid by Radha:
→ 16637.50 - 12500
→ 4137.5
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★ Fabia pays more:
→ 4500 - 4137.50
→ 362.5
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Hence, Fabia pays more 362.5 than Radha.