Question

Fabina borrows ₹ 25000 at 15% per annually for 2 years at simple interest and Radha borrowed the same amount for the same time provide and same rate but compounded annually who plays more interest and by how much?​

Answer 1

Fabina borrows ₹ 25000 at 15% per annually for 2 years at simple interest and Radha borrowed the same amount for the same time provide and same rate but compounded annually.

Here, Principal = ₹ 25000

Rate of interest = 15% per annum

Time = 2 years

Therefore, simple interest of Fabina

$=₹( \frac{25000 \times 15 \times 2}{100}) \\ = ₹7500$

Therefore, compound interest of Radha

$= ₹25000(1 + \frac{15}{100})^{2} - ₹25000 \\ = ₹(25000 \times \frac{23}{20} \times \frac{23}{20} - 25000) \\ = ₹(33062.50 - 25000) \\ = ₹8062.50$

Therefore, we can clearly see that the interest of Radha is more than that of Fabina.

Therefore, difference between the two interests

$= ₹(8062.50 - 7500) \\ = ₹562.50$

Answer:

Radha pays more interest by ₹562.50