fabina borrows ₹12,500 at 12% per annum for 2 years at simple interest and radha borrows the same amount for the same time period at 10% per annum,compounded annually.who pays more interest and by how much?
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Given,
Principal = 12,500
Time period = 2 years
Rate 1 = 12%
Rate 2 = 10%
To find,
who pays more interest and by how much
Solution,
Interest 1 = P x R x T/ 100
12,500 x 12 x 2/ 100
Interest 1 = 3000
Interest 2 = P x R 2 x T/ 100
12,500 x 10 x 2/ 100
Interest 2 = 2500
Difference in interest = (3000 - 2500) = 500
Hence, fabina pays more interest by Rs. 500
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