question_answer

Fabina borrows Rs. 12500 at 12% per annum for 3 years at simple interest and Radha borrows the same amount for the same time period at 10% per annum, compounded annually. Who pays more interest and by how much?

Answer:

For Fabina, P = Rs. 12500, R = 12% p.a.

T = 3 years

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

\[=\frac{12500\times 12\times 3}{100}=Rs.4500\]

For Radha, P = Rs. 12500, R = 10% p.a.

n = 3 years

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

\[12500{{\left( 1+\frac{10}{100} \right)}^{3}}\]

\[12500{{\left( \frac{11}{10} \right)}^{3}}\]

\[=12500\times \frac{11}{10}\times \frac{11}{10}\times \frac{11}{10}=Rs.\,16,673.50\]

\[C.\text{ }P.\text{ }=\text{ }A\text{ }\text{ }P\]

\[=16637.50-12500\]

= Rs. 4137.5

Fabina pay more interest, she pay more

\[=\text{ }45004137.50\]

= Rs 362.50