Rohit borrowed ₹ 40,000 for 2 years at 10% per annum C.I. and Manish borrowed the same sum for the same time at 10.5% per annum simple interest. Which of these two gets less interest and by how much?
Solution
Sum borrowed (P) = ₹40000
Rate (R) = 10% p.a. compounded annually
Time (T) = 2 years
∴ Interest for the first year =`"PRT"/100`
`=₹(40000xx10xx1)/100`
= ₹4000
Amount after one year = ₹40000 + 4000
= ₹44000
Principal for the second year = ₹44000
∴ Interest for the second year
`=(44000xx10xx1)/100`
= ₹4400
∴ Compound Interest for 2 years = ₹4000 + 4400
= ₹8400
In the second case,
Principal (P) = ₹40000
Rate (R) = 10.5% p.a.
Time (T) = 2 years
∴ Simple Interest = `"PRT"/100=(40000xx10.5xx2)/100`
`=₹(40000xx105xx2)/(100xx10)`
= ₹8400
In both the cases, interest is same.
