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?

Question

Philoid · Accepted Answer

Here, Principal (P) = Rs.12,500, Time, (T) = 3 years, Rate of interest (R) = 12% p.a.

Simple Interest for Fabina = PRT/100

= Rs. 4,500

Amount for Radha, P = Rs. 12,500, R = 10% and n = 3 years

= Rs. 16,637.50

∴ C.I. for Radha = A – P

= Rs. 16,637.50 – Rs. 12,500 = Rs. 4,137.50

Here, Fabina pays more interest

= Rs. 4,500 – Rs. 4,137.50 = Rs. 362.50