Question

Rohit borrowed Rs. 40000 for 2 years at 10% per annum C.I. and Manish borrowed the same sum for the same time at 10.5% per annum simple interest . Which of these two gets less interest and by how much?

Answer 1

Sum borrowed (P)=Rs. 400000
Rate(R) =10% p.a. compunded annually
Time(T) = 2years
$\therefore$ Interest for first year= $\frac{PTR}{100}$
$=Rs.\frac{40000\times 10\times 1}{100}=Rs.4000$ Amount after one year=Rs. 40000+ Rs. 4000
=Rs. 44000
Principal for the second year=Rs. 44000
$\therefore$ Interest for the second year
$=\frac{44000\times 10\times 1}{100}=Rs.4400$
$\therefore$ C.I. for 2 years =Rs. 4000+4400=Rs. 8400
In second case,
Principal (P)= Rs. 40000
Rate(R)= 10.5% p.a.
Time(T)= 2 years
$\therefore$ S.I. = $\frac{PTR}{100}=\frac{40000\times 10.5\times 2}{100}$
$=Rs.\frac{40000\times 105\times 2}{100\times 10}=Rs.8400$
In both the cases, interest is same.