Fabina borrows Rs 12,500 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,

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Fabina borrows Rs 12,500 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,

Fabina borrows Rs 12,500 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?

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Salim Ahmed Kawsar · Answer 1 · Feb 05, 2023 15:29:48

Interest paid by Fabina = P x R x T/100

= Rs (12500 x 12 x 3/100) = Rs 4500

Amount paid by Radha at the end of 3 years = A

= P(1 + R/100)ⁿ

A = Rs [12500(1 + 10/100)³]

= Rs [12500(100 +10/100)³]

= Rs (12500 x 110/100 x 110/100 x 110/100)

= Rs 16637.50

C.I. = A − P = Rs 16637.50 − Rs 12500 = Rs 4,137.50

The interest paid by Fabina is Rs 4,500 and by Radha is Rs 4,137.50.

Thus, Fabina pays more interest.

Rs 4500 − Rs 4137.50 = Rs 362.50

Hence, Fabina will have to pay Rs 362.50 more.

Salim Ahmed Kawsar · Answer 2 · Feb 05, 2023 15:29:48

Interest paid by Fabina ` = 12500**12/100**3 = 4500` Rs
Amount repaid by Radha ` = 12500(1+10/100)^3 ` Rs
` = 12500**11/10**11/10**11/10 = 16637.50` Rs So, interest paid by Radha ` = 16637.50-12500 = 4137.50` Rs
So, Fabina paid more interest.

Fabina borrows Rs 12,500 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,

2 Answers