Fabina borrows Rs 12,500 at 12% per annum for 3 years at simple

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 Multiple Choice QuestionsLong Answer Type

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141.

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. Who pays more interest and by how much?


For Fabina:

P = Rs 12500

T = 3 years

R = 12% p.a.

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= Rs fraction numerator 12500 cross times 3 cross times 12 over denominator 100 end fraction

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= Rs 4500


For Radha:

P = Rs 12500

T = 3 years

R = 10% p.a. (Compounded annually)

∴   straight A equals straight P open square brackets 1 plus straight R over 100 close square brackets to the power of straight n

= Rs space 12500 open square brackets 1 plus 10 over 100 close square brackets cubed

equals space Rs space 12500 open square brackets 11 over 10 close square brackets cubed

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= Rs fraction numerator 125 cross times 11 cross times 11 cross times 11 over denominator 10 end fraction

= Rs 16637.5

∴   CI = Rs 16637.5 - Rs 12500 = Rs 4137.50

Difference = Rs 4500 - Rs 4137.50 =  Rs 362.50

Thus, Fabina pays Rs 362.50 more.





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