Question

Bharath borrows 12500 at 12% for 3 years at simple interest and Madhuri borrows the same amount for the same time period at 10% compounded annually .who pays more interest and by how much?

Answer 1

I=P×R×T÷100
In case of Bharath,
P=12500
T=3 years
R=12%
So I=12500×3×12÷100=4,500
In case of Madhuri,
P=12500
R=10%
T=3 years
I=12500×3×10÷100
=3,750
Hence,Bharath have to pay more interest by 4,500.