 Hello and welcome to the session. Today I will help you with the following question. The question says, Favina borrows Rs 12,500 at 12% per annum for 3 years at simple interest and rather borrows the same amount for the same period at 10% per annum compounded annually. Who pays more interest and buy how much? Now we know the formula for amount is a is equal to p multiplied by 1 plus r upon 100 whole to the power n where a is the amount, p is the principle, r is the rate, n is the number of years also compound interest C i is equal to amount a minus the principle p and also the simple interest S i is equal to p multiplied by r multiplied by t upon 100 where p is the principle, r is the rate and t is the time. Now this is the key idea for this question. Now let's move on to the solution. Now first let's find the interest paid by Favina. Now in this case the principle p is equal to Rs 12,500. Now rate r is equal to 12% per annum, time t is equal to 3 years. Now it's given in the question that Favina borrows the amount at simple interest. Now we have the formula for simple interest S i is equal to p multiplied by r multiplied by t upon 100. Now we will substitute the values for p, r and t in this case. So we have simple interest S i is equal to Rs 12,500 multiplied by 12 multiplied by 3 total upon 100. Now these two zeros and these two zeros gets cancelled and we are left with Rs 125 multiplied by 12 multiplied by 3 and this is equal to Rs 4500. So we have simple interest is equal to Rs 4500. Therefore interest paid by Favina is equal to Rs 4500. Now we shall calculate the interest paid by Radha. Now in this case also the principle p is equal to Rs 12,500. Rate r is equal to 10% per annum compounded annually, time n is equal to 3 years. Now it's given in the question that in Radha's case the interest is compounded annually. So we will be using the formula for amount in this case. The given formula for amount is a is equal to p multiplied by 1 plus r upon 100 whole to the power n. Now we will be substituting the values for the principle p, rate r and time n. So this becomes equal to Rs 12,500 multiplied by 1 plus 10 upon 100 whole to the power 3. Now this zero and this zero gets cancelled. So this becomes equal to Rs 12,500 multiplied by 11 upon 10 the whole cube. Now this is further equal to Rs 12,500 multiplied by 11 cube is 1331 upon 10 cube is 1000. Now these two zeros and these two zeros gets cancelled and so we have Rs 125 multiplied by 1331 total upon 10. And this is equal to Rs 16,375 total upon 10 which further is equal to Rs 16,637.50. So we have the amount a is equal to Rs 16,637.50 and now the compound interest c i is equal to amount a minus principle p and that is equal to Rs 16,637.50 minus Rs 12,500 and so this is equal to Rs 4,137.50. So the compound interest c i is equal to Rs 4,137.50. Therefore interest paid by Radha is equal to Rs 4,137.50. Now the difference in interest paid by Fabina and Radha is equal to the interest paid by Fabina that is Rs 4,500 minus interest paid by Radha that is Rs 4,137.50 and this is equal to Rs 362.50. Now as you can see interest paid by Fabina is Rs 4,500 which is obviously more than the interest paid by Radha which is Rs 4,137.50. So we say that Fabina pays more interest than Radha and hence our final answer is Fabina pays Rs 362.50 more. So hope you enjoyed the session. Have a good day.