Question

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?

Answer 1

Here, Principal, `P = 12000` Rs
Rate of interest, `r = 6%`
Time, `t = 2` years
So,
Simple Interest, `S.I. = (P**r**t)/100 = (12000**6**2)/100=1440` Rs
Compound Interest, `C.I. = P((1+r/100)^t-1)`
`C.I. = 12000(53/50**53/50 -1) = 12000**0.1236 = 1483.20` Rs
So, extra amount paid ` = C.I.-S.I. = 1483.20 -1440 = 43.20` Rupees