Question

3.
Fabina borrows * 12,500 at 12% per annum for 3 years at simple interest
Radha borrows the same amount for the same time period at 10%
compounded annually. Who pays more interest and by how much?
​

Answer 1

Answer:

in case of Fabina:

P=Rs.12500 

R=12% per annum and T=3 years, then 

SI=100P×R×T=Rs.(10012500×12×3)=Rs.4500

In case of Radha:

Amount=P(1+100R)T

Amount=Rs.[12500×(1+10010)3]

               =Rs.(12500×100110×100110×100110)=Rs.16637.50

∴ Compound Interest =Rs.(16637.50−12500)=Rs.4137.50

Hence, Fabina pays Rs.(4500−4137.50),i.e.,Rs.362.50 more as interest.