Question

Arun and Ajay borrowed Rs.400 each at 10% interest per annum. Arun borrowed at compound interest while Ajay borrowed at simple interest. In both the cases, the interest was calculated half yearly. At the end of one year -

• A. Both paid the same amount as interest
• B. Arun paid Rs.1 more as interest
• C. Ajay paid Rs.5 more as interest
• D. Ajay paid Rs.5 less as interest.

Answer 1

Answer: (B)

Arun paid Rs.1 more as interest

For Arun

$P=400$

$R=10$%

$T=1$

Since Interest in compounded half - yearly.

$\therefore A=P{(1+\frac{R}{200})}^{2T}$

$=400{(1+\frac{10}{200})}^2$

$=400\times {\left(\frac{21}{20}\right)}^2$

$=441$

$\therefore$ Interest paid by Arun $=Rs$ $(441-400)$

$=Rs$ $41$

For Ajay

$P=400$

$R=10$%

$T=1$

$S.I=\frac{PTR}{100}$

$=\frac{400\times 1\times 10}{100}$

$=Rs$ $40$

$\therefore$ Arun paid $Rs$ $1$ more as interest.