Question

I borrowed 12000 rupees from jamshed at 6 percent per annum simple interest for 2 years .Had i borrwed this sum at 6 percent per annum compound interest, what extra amount would i gave to pay ?

Answer 1

43.2 Rupees

Explanation:

To determine how much extra will be paid, we calculate the Amount at Simple Interest and the Amount at Compound Interest and Make Comparisons.

Now, Principal=12000

Rate=6%

Time= 2 years

Amount at Simple Interest= Principal+ Simple Interest

=P+(PRT)/100

=12000+(12000X6X2)/100

=12000+1440

=13440 Indian Rupees

Amount at Compound Interest

A=P(1+r)ⁿ

=12000(1+0.06)²

=12000(1.06)²

=13483.2 Indian Rupees

Difference=Amount at Compound Interest- Amount at Simple Interest

=13483.2-13440

=43.2 Indian Rupees

If he had borrowed at Compound interest, he would have paid an extra 43.2 Rupees