Mr sithole intends to renovate his ceiling which is falling the carpenter quoted him R16000 for materials and labor .Mr sithole does not have the required cash at the moment he plans to borrow the money since the repairs are urgent .Mr sithole approached two bank A offered to lend him R16000 for five years at 18% per annum simple interest . bank B will lend him R16000 for five years at 16% interest compounded per annum.