Fabina borrows ₹ 12,500 at 12% 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? 

Solution:

For Simple Interest:

A = (P × R × T)/100 

P = ₹ 12,500

T = 3 years

R = 12% simple interest

where , A = Amount, P = Principal, T = Time period in years and R = Rate percent

Thus, Simple Interest paid by Fabina for 3 years at the rate of 12% per annum

S.I. for 3 years = (3 × 12500 × 12)/100

= 3 × 125 × 12

= 4500

For Compound Interest:

A = P[1 + (r/100)]ⁿ

P = ₹ 12,500

n = 3 years

R = 10% compounded annually

Thus, Amount paid by Radha for 3 years at the rate of 10% p.a. compounded annually

A = P[1 + (r/100)]ⁿ

A = 12500[1 + (10/100)]³

A = 12500(11/10)³

A = 12500 × (11/10) × (11/10) × (11/10)

A = 12500 × (1331/1000)

A = 12500 × 1.331

A = 16637.50

Compound Interest = A - P

= 16637.50 - 12500

= 4137.50

Since 4500 > 4137.50, Fabina paid more interest than Radha.

Additional Interest paid by Fabina = 4500 – 4137.50 = ₹ 362.50

☛ Check: NCERT Solutions for Class 8 Maths Chapter 8

---

Video Solution:

Fabina borrows ₹ 12,500 at 12% 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?

NCERT Solutions Class 8 Maths Chapter 8 Exercise 8.3 Question 3

Summary:

Fabina borrows ₹ 12,500 at 12% 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. Fabina pays more interest and by ₹ 362.50.

---

☛ Related Questions:

• Vasudevan invested ₹ 60,000 at an interest rate of 12% per annum compounded half-yearly. What amount would he get (i) after 6 months? (ii) after 1 year?
• Arif took a loan of ₹ 80,000 from a bank. If the rate of interest is 10% per annum, find the difference in amounts he would be paying after 1(1/2) years if the interest is (i) Compounded annually (ii) Compounded half-yearly
• Maria invested ₹ 8,000 in a business. She would be paid interest at 5% per annum compounded annually. Find: (i) The amount credited against her name at the end of the second year (ii) The interest for the 3rd year.
• Find the amount and the compound interest on ₹ 10,000 for 1(1/2) years at 10% per annum, compounded half yearly. Would this interest be more than the interest he would get if it was compounded annually?