Arvind borrows a sum of₹20000 at 6% p.a. simple interest for 2 years. On the same day, Asif borrows the same sum at the same rate of interest but compounded annually for 2 years. Who pays more interest and by how much?
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Answer:
arvind:
si = prt /100 = 20000 × 6 × 2 /100 = 240000/100 = ₹2400
asif:
ci =[ p(1+r/100) ^t ]- p
= [20000(1+6/100) ^2]-20000
= [20000 ×106/100 × 106/100]-20000
=22472-20000
= 2472 rs
asif pays more interest than arvind by ₹ 2472
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