Question

I borrowed Rs 12,000/- from Deepak at 6% per annum, simple interest for 2years. Had I borrowed this sum at 6% per annum compound interest, what extra amount would I have to pay?

Answer 1

Answer:

Rs 43.20

Step-by-step explanation:

Given,

Principal,P =Rs 12000  

Simple interest Rate,R = 6% p.a.

Time period,n = 2 years.  

\therefore Simple Interest, SI at 6% for 2 years =

          $=2\times\frac{12000\times6}{100} = Rs 1440$

If he would have borrowed it at a compound interest Rate, R = 6% p.a.

We know, Amount when interest is compounded annually, A =

$A = P(1+\frac{R}{100})^n$

Therefore,

$A = 12000(1+\frac{6}{100})^2= Rs 13483.20$

Therefore $Compound\:\: Interest, CI = A - P = Rs \:(13483.20 - 12000) = Rs\: 1483.20$

 

Therefore, He would have to pay Rs (1483.20 - 1440) = Rs 43.20 extra.