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in Mathematics by (15.0k points)

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?

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Interest paid by Fabina = P x R x T/100

= Rs (12500 x 12 x 3/100)  = Rs 4500

Amount paid by Radha at the end of 3 years = A 

= P(1 + R/100)n

A = Rs [12500(1 + 10/100)3]

= Rs [12500(100 +10/100)3]

= Rs (12500 x 110/100 x 110/100 x 110/100)

= Rs 16637.50

C.I. = A − P = Rs 16637.50 − Rs 12500 = Rs 4,137.50

The interest paid by Fabina is Rs 4,500 and by Radha is Rs 4,137.50.

Thus, Fabina pays more interest.

Rs 4500 − Rs 4137.50 = Rs 362.50

Hence, Fabina will have to pay Rs 362.50 more.

 

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