I borrowed ₹ 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?

Solution:

For Simple Interest:

A = (P × R × T)/100

P = ₹ 12,000

T = 2 years

R = 6% simple interest

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

Simple Interest to be paid for 2 years at the rate of 6% per annum

S.I. for 2 years = 2 × 12000 × (6/100)

= 2 × 120 × 6

= 1440

For Compound Interest:

A = P[1 + (r/100)]ⁿ

P = ₹ 12,000

n = 2 years

R = 6% compounded annually

Compound Interest to be paid for 2 years at the rate of 6% per annum

A = P[1 + (r/100)]ⁿ

A = 12000[1 + (6/100)]²

A = 12000[(100/100) + (6/100)]²

A = 12000 × (106/100) × (106/100)

A = 12000 × (11236/10000)

A = 12000 × 1.1236

A = 13483.20

Compound Interest = A - P

= 13483.20 - 12000

= ₹ 1483.20

Compound Interest - Simple Interest = 1483.20 - 1440

= ₹ 43.20

☛ Check: NCERT Solutions for Class 8 Maths Chapter 8

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Video Solution:

I borrowed ₹ 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?

NCERT Solutions Class 8 Maths Chapter 8 Exercise 8.3 Question 4

Summary:

I borrowed ₹ 12,000 from Jamshed at 6% per annum simple interest for 2 years. Had I borrowed this sum at 6% per annum compound interest, the extra amount I would have to pay ₹ 43.20.

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