question_answer

I borrowed Rs. 12000 from Jamshed at 6% per annum simple interest for 2 years. If I borrowed this sum at 6% per annum compound interest, what extra amount would I have to pay?

Answer:

Here,   P = 12000, R = 6% p.a.

T = 2 years

S. I. = \[\frac{P\times R\times T}{100}\]

\[=\frac{12000\times 6\times 2}{100}=Rs.\,1440\]

Amount (A) \[=\text{ }P+S.I.=12000+1440\]

=Rs. 13440

Again in second case,

A = P\[{{\left( 1+\frac{R}{100} \right)}^{n}}\]

\[=12000{{\left( 1+\frac{6}{100} \right)}^{2}}\]

\[=12000{{\left( \frac{53}{50} \right)}^{2}}\]

\[=12000\times \frac{53}{50}\times \frac{53}{50}\]

= Rs.13483.20

I pay extra amount \[=\text{ }{{A}_{2}}{{A}_{1}}\]

= Rs. 13483.20 - Rs.13440

= Rs. 43.20