Question

Murugan borrows ₹12500 at 12%per annum for 3 yearsat simple interest and raghu borrows the same amount for the same period at 10% per annum compounded annually.who pays more interest and how much?

Answer 1

Answer:

Step-by-step explanation:

For Murugan,

Principal = ₹ 12,500

Rate = 12% per annum

Time period = 3 years at S.I

So, the Amount received by him after 3 years is given by

A = P + S.I

Where A, P are Amount and Principal respectively

Now, we know that

S.I = P×R×T/100

Putting the given values in the above formula,

S.I = 12,500×12×3/100

= ₹ 4,500 -- (1)

Therefore, the intrest to be paid is ₹ 4,500

Now, For Raghu,

Principal = ₹12,500

Rate = 10% per annum

Time Period = 3 years compounded annually

Therefore, The amount to be paid by him is given by

Amount = Principal × ( 1+R/100)^t

Putting the values given in the above formula

A= 12,500 × ( 1 + 10/100) ^ 3

= 12,500 × 1.1^3

= ₹16637.5

Now The interest ( C.I ) is given by

C.I = Amount - Principal

= ₹ 16,637.5 - 12,500

= ₹ 4,137.5 -- ( 2 )

By comparing both the (1) & (2) , we now know that

(1) > (2)

Therefore Murugan pays more interest than Raghu

Difference = ₹ 4,500 - 4,137.5

= ₹ 362.5

Therefore, Murugan pays more interest by ₹ 362.5

I hope this helps you out :)