Question 4 I borrowed Rs 12,000 from Jamshed at 6% per annum simple interest for 2 years. Had I borrowed this sum at 6% per annum compound interest, what extra amount would I have to pay?Simple Interest
Principal (P) = 12,000
Rate (R) = 6% per Annum
Time (t) = 2 years.
Interest (I) = (𝑃 × 𝑅 × 𝑇)/100
= (12000 × 6 × 2)/100
= 120 × 12
= 1440
Compound Interest
Principal (P) = 12,000
Rate (R) = 6% per Annum
Time (t) = 2 years.
Amount (A) = (1+𝑅/100)^𝑛
A = 12000 × (1+ 6/100)^2
= 12000 × ((100 + 6)/100)^2
Now
Amount (A) = Principal + Interest
= 12000 + 1440
= 13440
= 12000 × ((100 + 6)/100)^2
= 12000 × (106/100)^2
= 12000 × (106 × 106)/(100 ×100)
= 12000 × 11236/10000
= (12 × 11236)/10
= 134832/10
= 13483.2
∴ Amount using Simple interest = Rs 13440
& Amount using Compound interest = Rs 13483.2
Extra Amount = Amount Using Compound interest – Amount using Simple Interest
= 13483.2 − 13440
= 43.2
∴ I have to Pay Rs 43.20 extra

Made by

Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 14 years. He provides courses for Maths, Science and Computer Science at Teachoo

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