Question

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

Answer 1

Given $P=Rs.12000N=2R=6$

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

SI = $\frac{12000\times 6\times 2}{100}=1440$

$A=SI+P=1440+12000=$ Rs. $13440$

Compound interest:

$A=P{(1+\frac{r}{100})}^n$

$=12000{(1+\frac{6}{100})}^{\left(2\right)}$

$=12000\left(1.1236\right)$

$=Rs.13483.2$

Amount $=Rs.13483.20$

$CI=A-P=13483.20-12000$

$=Rs.1483.20$

Extra interest $=13483.20-13440=Rs.43.20$