Q3 of 30 Page 128

Ambadas took a loan of Rs 96,000 at compound interest from a bank to drill a well in his field. If the rate is 6.25 p.c.p.a. what amount will he have to pay to the bank, if he returns the loan after 2 years, what amount will he have saved had he been able to borrow the same amount at simple interest for the same period at the same rate?

Given: Principal (P) = Rs. 96000, Rate of Interest (R) = 6.25% and Number of years (n) = 2year

As simple interest (SI):




⇒ SI = Rs. 12000


For compound interest:


As Amount (A):






⇒ A = Rs. 108,375


As compound interest (CI),


CI = A - P


CI = 108375 - 96000


⇒ CI = Rs.12375


Difference between CI and SI is :


D = CI – SI


⇒ D = 12375 – 12000


⇒ D = Rs. 375


She would save amount = Rs. 375


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