Question

Ranchodbhai took a loan of Rs.50,000 at 9% rate of interest for 2 years at simple interest to renovate his bungalow. If in the place of simple interest the compound interest is paid then how much more interest will he have to pay?.

Answer 1

$P=50000,r=9\%,t=2$

Let $A_s\to$Amount for SI

$A_c\to$Amount for CI

$A_c-A_s=P(1+\frac{r}{100}{)}^t-P(1+\frac{rt}{100})$

$=50000(1+\frac{9}{100}{)}^2-50000(1+\frac{9\times 2}{100})$

$=59405-59000$

$=Rs.405$