Question

Vijay Mallaya and Nirav Modi must repay their respective loans through three equal annual payments of Rs.30000 each. Vijay Mallaya pays at 10% per annum of simple interest while Nirav Modi pays 10% per annum compound interest. What is the difference in their payments? Answer choices​

Answer 1

Answer:

Thus, The difference in their payments will be Rs.930.

Step-by-step explanation:

Given,

   Vijay Mallaya and Nirav Modi must repay their respective loans through three equal annual payments of Rs.30000 each.

Vijay Mallaya pays at 10% per annum of simple interest while Nirav Modi pays 10% per annum compound interest.

We need to find the difference in their payments?

Sol: We have,

         For Vijay Mallaya,

                       Principal = Rs.30000

                              Rate = 10%

                           Time = 3 Years

       The simple interest pays by Vijay

                            $S.I.=\frac{P*R*T}{100} \\S.I.=\frac{30000*10*3}{100} \\S.I.=9000$

    ∴ The total amount pays by Vijay = Principal + S.I.

                                                             = 30000 + 9000

                                                             = Rs.39000

       For Nirav Modi,

                       Principal = Rs.30000

                             Rate = 10%

                             Time = 3 Years

        The compound interest pays by Nirav Modi

                              $C.I.=P(1+\frac{R}{100})^{t} -P\\C.I.=30000(1+\frac{10}{100} )^{3} -30000\\C.I.=30000([\frac{11}{10}] ^{3}-1)\\ C.I.=30000(\frac{1331-1000}{1000} )\\C.I.=30*331\\C.I.=Rs.9930$

     ∴  The total amount pays by Nirav = Principal + S.I.

                                                             = 30000 + 9930

                                                             = Rs.39930

     Therefore, the difference in their payments = 39930 - 39000

                                                                               = Rs.930

 Thus, The difference in their payments will be Rs.930.