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

The extra amount payable would be interest on the first year’s interest
1st year’s interest = 12000 x 6%=720
Interest on 720 = 720 x 6%=43.20
Extra amount payable = Rs. 43.20