Question

Rishi borrowed 320,000 for 3 years at the rate of 8.5% p.a. simple interest, while John
borrowed the same amount for the same period at 8% p.a. compounded annually. Who
paid less interest and by how much?​

Answer 1

Answer:

john borrowed paid less interest 4,0000

Answer 2

Answer:

Rishi paid less interest ($1,507.84)

Step-by-step explanation:

$A_{Rishi}$ = P(1 + rt)

P = $320,000, r = 8.5% = 0.085, t = 3 years.

$A_{Rishi}$ = 320,000(1 + 0.085×3) = $401,600

$A_{John}$ = P(1 + $\frac{r}{n}$ $)^{nt}$

P = $320,000, r = 0.08, n = 1, t = 3 years

$A_{John}$ = 320,000(1 + 0.08)³ = $403,107.84

$A_{John}$ - $A_{Rishi}$ = $403,107.84 - $401,600 = $1,507.84