Question

Mahima borrowed 320,000 at 10% per annum for 2 years at simple interest.
Garima borrowed 320,000 at 10% per annum compounded annually for 2 years.
Who pays more interest and by how much?​

Answer 1

QUESTION

Mahima borrowed 320,000 at 10% per annum for 2 years at simple interest.

Garima borrowed 320,000 at 10% per annum compounded annually for 2 years.

Who pays more interest and by how much?

SOLUTION

FOR MAHIMA

P = 320000 ; R = 10% ; T = 2years

FORMULA

$S.I. = \frac{P×R×T}{100}$

So,

$S.I. = \frac{P×R×T}{100}$

$S.I. = \frac{320000×10×2}{100}$

$S.I. = 64,000$

FOR GARIMA

P = 320000 ; R = 10% ; T = 2years.

FORMULA

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

$C.I. = A - P$

So,

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

$A = 320000(1+\frac{10}{100})^2$

$A = 320000(\frac{11}{10})^2$

$A = 320000×\frac{121}{100}$

$A = 387200$

NOW

$C.I. = A - P$

$C.I. = 387200 - 320000$

$C.I. = 67200$

DIFFERENCE

DIFFERENCE = Garima's Interest - Mahima's Interest

=> 67200 - 64000

=> 3200

HOPE THIS ANSWER WILL HELP YOU!!