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. What is the difference in interest paid by Fabina?(If your answer is $x$, then write $\left[x\right]$)

Answer 1

Interest on Fabina $=\frac{P\times t\times r}{100}$

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

$=\frac{450000}{100}$
$=4500$
Amount for Radha is $A=P{(1+\frac{R}{100})}^t$
$=12500{(1+\frac{10}{100})}^3$
$=12500{\left(\frac{11}{10}\right)}^3$
$=16637.50$
Interest for Radha $=16637.50-12500=4137.50$
Interest paid by Fabina is Rs. $(4500-4137.50)=362.50$