Fabina borrows ₹ 12,500 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?

Here, Principal (P) = ₹ 12,500, Time (T) = 3 years, Rate of interest (R) = 12% p.a.
Simple Interest for Fabina = PxRxT/100 = 12500x12x3/100 = ₹ 4,500
Amount for Radha, P = ₹ 12,500, R = 10% and n = 3 years
Amount (A) = P(1+R/100)ⁿ = 12500(1+10/100)³ = 12500(1+1/100)³
12500(11/10)³ = 1250×11/10 x 11/10 x 11/10 = ₹ 16,637.50
∴ C.I. for Radha = A – P = ₹ 16,637.50 – ₹ 12,500 = ₹ 4,137.50
Here, Fabina pays more interest = ₹ 4,500 – ₹ 4,137.50 = ₹ 362.50

Class 8 Maths Chapter 8 Exercise 8.3 Solution in Video

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