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Question 4
I borrowed Rs 12,000 from Jamshed at 6% per annum simple interest for 2 years. Had I borrowed this sum at 6% per annum compound interest, what extra amount would I have to pay?
 


Solution

Here, Principal (P) Rs 12,000 , Time (T) = 2 years, Rate of interest (R) = 6% p.a
Simple interest
=P×R×T100
=12000×6×2100
=Rs,1,440

Had he borrowed this sum at 6% p.a compound interest then

Compound Interest
=P(1+R100)nP
=12000(1+6100)212000
=12000(1+350)212000
=12000(5350)212000
=13,483.2012,000
=1,483.20

Difference in both interest
= ₹1,483.20 - ₹1,440.00 = ₹ 43.20

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