Question

Naaz borrows Rs. 12500at 12% per annum for 3 years at simple interest and zara borrows the same amount for the same time period at 10% per annum, compound annually. Who pays more interest and how much ​

Answer 1

Naaz: simple interest

Principle: ₹ 12500

Rate:12%

Time:3yrs

SI = p *r*t / 100

=12500*12*3 /100

= ₹4500

So Naaz pays rs 4500 as simple interest.

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Zara : compound interest

Principle =₹12500

Rate:12%

Time= 3 years

Compound interest = principle ( 1 + r /100) ^3

=12500 ( 1+ 12/100)^3


= 12500( 100/100 +12/ 100)^3

= 12500( 112/100) ^3

= 12500 * 112/100*112/100*112/100
= 17561.6

So Zara pays rs 17561.60 as compound interest.

So Zara pays more interest by rs13061.6