Fabina 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. Who pays more interest and by how much?
Answers
Answer:
For Fabina,
Principal,P =Rs 12500
Simple interest Rate,R = 12% p.a.
Time period,n = 3 years.
Simple Interest, SI at 12% for 3 years =
= Rs 4500
For Radha,
Principal,P =Rs 12500
Compound interest Rate,R = 10% p.a.
Time period,n = 3 years.
We know, Amount when interest is compounded annually,
Fabina pays more interest and Rs (4500 - 4137.50) = Rs 362.50 more.
Step-by-step explanation:
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Question :-
Fabina 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. Who pays more interest and by how much?
Given :-
Fabina 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.
Find Out :-
Who pays more interest and by how much?
Solution :-
Let fabina pays x amount of interest and radha pays y amount of interest .
Now , we will see the amount paid by both after 3 years.
For finding amount paid by Fabina -
P = Rs. 12,500
N = 3 years.
R = 12%
✭ ✭
➙
➙
For finding amount paid by Radha -
P = Rs. 12500
N = 3 years.
R = 10% which is compounded annually.
✭ ✭
➙
➙
➙
➙
∴ CI = Rs. 16637.5 - 12500
➙ Rs. 4137. 50
Therefore , amount paid by radha = Rs. 4137.50
So , difference of money
➙ Rs. 4500 - Rs. 4137.50
➙ Rs. 362.5
Henceforth, Fabina pays Rs. 362.5 more.