Question

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?

Answer 1

Fabina:

$SI=\frac{12500\times 3\times 12}{100}=4500$

Simple interest, $SI=$ Rs $4500$

Radha:

$A=p{(1+\frac{r}{100})}^n=12500{(1+\frac{10}{100})}^{\left(3\right)}=12500\left(1.331\right)=16637.5$

Amount $=$ Rs $16637.50$

$CI=A-P=$ Rs $16637.5-12500=$ Rs $4137.5$

Fabina pays more interest by Rs $362.50$