Question

Fabina borrows Rs 12000 12%p.a. for 3 years at simple interest and Radha borrows the same amount for the same time period at 10%, compounded annually. Who pays more interest and by how much?

Answer 1

Fabiana pays more interest by ₹348

Answer 2

Given:

→ Fabiana 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.

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Find:

→ Who pays more interest and by how much?

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Using formula:

→ S.I = (Principal × Rate × Time)/100

→ A = Principal (1 + Rate/100)ⁿ

→ C.I = Amount - Principal

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Note:

→ (ⁿ) = Number of years or Time period.

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Calculations:

★ Finding for Radha:

→ (12500 × 12 × 3)/100

→ 450000/100

→ 4500

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★ Finding for Fabina:

→ 12500 × (1 + 10/100)³

→ 12500 × (11/10)³

→ {12500 (11 × 11 × 11)}/1000

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→ 125 × 1331/10

→ 166375/10

→ 16637.5

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★ Amount paid by Radha:

→ 16637.50 - 12500

→ 4137.5

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★ Fabia pays more:

→ 4500 - 4137.50

→ 362.5

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Hence, Fabia pays more 362.5 than Radha.