Question

reena and ruchira borrowed rupees 60000 and 50000 respectively for a period of 3 years Reena paid simple interest @ 10% period while ruchira paid compound interest @ 10% compounded interest who paid more interest and by how much

Answer 1

Reana borrowed the amount on Simple Interest,

so the interest paid by her =

Principal = Rs. 60000, Rate of Interest = 10% Time = 3 years.

So the formula for SI = P x R x T /100

= 60000 x 10 x 3 / 100 = Rs. 18000.

Ruchira borrowed the amount on Compound Interest, so the interest paid by her =  Principal = Rs. 50000,      Rate of Interest = 10%

Time = 3 years, interest compounded annually.

So the formula for Coumpound Interest =   A = [P (1 + R/100)^n]

A = [P (1 + 10/100)^n]

A= 50000(1 + 0.1/1)^3 = 50000(1.1)^3 = 50000 ×(1.1)×(1.1)×(1.1)

A=50000 x 1.331 = 66550.

So the Interest pad by Ruchira = Rs. 66550 - 50000 = Rs. 16550.

So Reena pays more interest and by Rs. 18000 - 16550 = Rs. 1450.00

Ans. Rs. 1450.