Question

Nikhil borrowed ₹ 25000 at 15% simple interest for 2 years and his
Friend Arun borrowed the same about at same rate of
interest for 2 years compounded annually .Who paid
more interest and by how much?

Answer 1

Answer: Compound Interest is nothing but Simple interest per year with the amount at the end of every year being the principal for the next year.

For the first year ,

Simple Interest SI=

100

PNR

So, SI=

Rs.100

25000×1×20

=Rs5000

So, Amount A=25000+5000=Rs30000

For the second year ,

P =30000−8000=Rs22000

So, SI=

100

22000×1×20

=Rs4400

So, Amount A=22000+4400=Rs26400

For the third year ,

P =26400−8000=Rs18400

So, SI=

100

18400×1×20

=Rs3680

So, Amount A=18400+3680=Rs22080

So, Rs22080 has to paid off to clear the loan.

Step-by-step explanation:

Hope it helps you dear...