Question

$\large\underbrace{\bf{Question}}$

Ram takes the loan of total ₹29000 from the bank at 10% compounded annually.What will be the amount Ram had to pay. If Raju also takes the loan of 28900 at the 11% at simple interest. What will the amount that Raju has to pay. Who pays more amount and by how much.

Do you agree that bank loans should be calculated with compound interest.​

Answer 1

Solution :-

Given that

The amount taken by Ram from the bank = ₹ 29000

Interest on it = 10% compounded annually.

We know that

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

We have,

P = ₹ 29000

T = 1 years

n = Number of times the interest is calculated compoundly = 1

On substituting these values in the above formula then

=> A = 29000[1+(10/100)]¹

=> A = 29000[1+(1/10)]

=> A = 29000[(10+1)/10]

=> A = 29000(11/10)

=> A = 2900×11

=> A = ₹ 31900

Ram will have to pay to the bank after one year = ₹ 31900 ----------(1)

Loan amount taken by Raju = ₹28900

Rate of interest = 11% at simple Interest

We know that

Simple Interest = PTR/100

We have,

P = ₹ 28900

T = 1 year

R = 11%

On substituting these values in the above formula then

=> S.I = (28900×11×1)/100

=> S.I. = 28900×11/100

=> S.I. = 289×11

=> S.I = ₹ 3179

We know that

Amount = Principal + Interest

=> Amount = 28900+3179

=> Amount = ₹ 32079

Raju will have to pay to the bank after 1 year is ₹ 32079 --------(2)

Raju will pay more amount than Ram

The difference between the amounts

= ₹ 32079 - ₹ 31900

= ₹ 179

Answer :-

Raju will have to pay ₹179 more amount than that of Ram.

The banks loans are calculated with simple Interest for one year.

Note :-

The simple Interest and Compound interest are same for same principal for one year only.