Q. 94.6( 46 Votes )

I borrowed Rs. 12000 from Prasad at 6% per annum simple interest for 2 years. Had I borrowed this sum at 6% per annum compounded annually, what extra amount would I have to pay?

Answer :

Principal (P) = Rs. 12000

Rate of interest (R) = 6%


Time period (T) = 2years




I = Rs. 1440


Interest for 2 years is Rs. 1440


This sum to be borrowed at 6% per annum compounded annually,


Principal (P) = Rs. 12000


Rate of interest (R) = 6%


Time period (n) = 2years




= 12000×1.062


= 13483.2


Amount = Rs. 13483.2



= 13483.2-12000


Compound Interest = Rs. 1483.2


The difference in interest = 1483.2 - 1440


= Rs. 43.2


The difference in interest is Rs. 43.2


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