Bharati borrows amount of 12,500 at 12% per annum for 3 years at SI and madhuri borrows same amount for same time period at 10% per annum compounded annually.who pays more and by how much?
362.50
This answer is wrong
To determine who pays more interest, we need to calculate the interest paid by both Bharati and Madhuri.
First, let's calculate the simple interest (SI) paid by Bharati. The formula for simple interest is:
SI = (Principal * Rate * Time) / 100
Where:
Principal = Amount borrowed = Rs. 12,500
Rate = Annual interest rate = 12%
Time = Number of years = 3 years
Using the formula:
SI (Bharati) = (12,500 * 12 * 3) / 100
SI (Bharati) = 4,500
So, Bharati pays Rs. 4,500 in simple interest.
Now, let's calculate the compound interest (CI) paid by Madhuri. The formula for compound interest, compounded annually, is:
CI = Principal * (1 + Rate/100)^Time - Principal
Using the formula:
CI (Madhuri) = 12,500 * (1 + 10/100)^3 - 12,500
CI (Madhuri) = 12,500 * (1.10)^3 - 12,500
CI (Madhuri) = 12,500 * 1.331 - 12,500
CI (Madhuri) = 1,65,875 - 12,500
CI (Madhuri) = 1,53,375
So, Madhuri pays Rs. 1,53,375 in compound interest.
To compare who pays more, we subtract the SI paid by Bharati from the CI paid by Madhuri:
Difference = CI (Madhuri) - SI (Bharati)
Difference = 1,53,375 - 4,500
Difference = 1,48,875
Therefore, Madhuri pays Rs. 1,48,875 more interest than Bharati.
362.50
1. P1 = Po + Po*r*t.
P1 = 12,500 + 12,500*0.12*3 =
2. P2 = Po(1+r)^n.
Po = 12,500, r = 0.10.
n = 1comp./yr. * 3yrs. = 3 compounding periods.
P1-P2 =