Question

You have to lend Rs. 75000
for two years for a purpose. If a finance company A lends
money at 10% per annum compounded annually and
finance company B lends money at 8% per annum
compounded semi-annually. From which finance
company will you take the loan and why?​

Answer 1

Required Answer

Question:

• You have to lend Rs. 75000 for two years for a purpose. If a finance company A lends money at 10% per annum compounded annually and finance company B lends money at 8% per annum compounded semi-annually. From which finance company will you take the loan and why?

Answer:

》 Finance company A :

A = $\sf{P(1 + \frac{R}{100}) ^{n}}$

A = $\sf{75,000(\frac{10}{100})^{2}}$

A = 75,000 (1 + 0.1)²

A = 75,000 × 1.21

A = 90,750

》 Finance company B :

A = P$\sf{(1 + \dfrac{\frac{R}{2}}{100})^{n \times 2}}$

A = $\sf{75,000(1 +  \dfrac{\frac{8}{2} }{100})^{2 \times 2}}$

A = 75,000 (1 + 0.04)⁴

A = 75,000 × 1.16986

A = 87,739.5

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》Finance company A:

Interest =  Rs. 15,750

Total amount = Rs. 90,750

》Finance company B:

Interest = Rs. 12,739.5

Total amount = Rs. 87,739.5

Therefore,The amount to be returned at  Finance company B is less than that of Finance company A  so it is profitable to take the loan from Finance company B.

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HOPE SO IT WILL HELP ✔✔

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