Question

"A” and "B” have to clear their respective loans by paying 3 equal annual installments of Rs.4,00,000 each. "A” pays at 10% per annum of simple interest while "B” pays 10% per annum compound interest. What is the difference in their payments?

• A. 4333.33
• B. 5250
• C. 3450
• D. 4000

Answer 1

The correct option is D

4000

- 4, 00, 000{1 + 1.1 + (1.1)${}^2$} - 4, 00, 000{1 + 1.1 + 1.2} = 4000. Option(d).