Compound Interest

Chapter 8 Class 8 Comparing Quantities
Concept wise

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### Transcript

Ex 8.3, 3 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? Fabina (Simple Interest) Principal (P) = 12, 500 Rate (R) = 12% per Annum Time (t) = 3 years. Interest (I) = (π Γ π Γ π)/100 = (12500 Γ 12 Γ 13)/100 = 125 Γ 36 = 4500 Radha (Compound Interest) Principal (P) = 12, 500 Rate (R) = 10% per Annum Time (t) = 3 years. Amount (A) = (1+π/100)^π = 12500 (1+10/100)^3 = 12500 (1+1/10)^3 = 12500 ((10 + 1)/10)^3 = 12500 (11/10)^3 = 12500 ((11 Γ 11 Γ 11)/(10 Γ10 Γ10)) = 12500 ((121 Γ 11)/1000) = (125 Γ 1331)/10 = 166375/10 = 16637.5 Now Amount = Principal + Interest 16637.5 = 12500 + Interest 16637.5 β 12500 = Interest 4137.5 = Interest β΄ Interest = 4137.5 β΄ Interest paid by Fabina = Rs 4500 & interest Paid by Radha = Rs 4137.5 Since 4500 > 4.137.5 β΄ Fabina Paid more interest than Radha. Also, Interest paid by Fabina β Interest Paid by Radha = 4500 β 4137.5 = 362.50 β΄ Fabina pays Rs 362.50 more than Radha

#### Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 12 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.