As per scheme a car loan of Rs. 4 lakh at 12.5% rate of simple interest can be borrowed on a repayment term of lump sum amount at the end of 3 years. As per scheme (b), the amount can be repaid at the end of 2 years, but compound interest (compounded annually) would be charged at the same rate. What would be the difference in amount of interest between the two schemes? A) Rs. 42,675 B) Rs. 43,750 C) Rs. 41,025 D) 43,125

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• 5 years agoHelpfull: Yes(0) No(3)
• 43750
  4lakh 2 year inte. 1 lakh
• 5 years agoHelpfull: Yes(0) No(0)
• S.I= pnr/100 = (4*12.5*3)/(100) = 1.5 lakhs
  Compound interest for 2 years
  1) 400000 * 12.5/100 = 50000 in 1st year
  2) (400000+50000) * 12.5 / 100 = 56250 in 2nd year
  Therefore totally it becomes CI = 106250
  Then difference is 150000 - 106250 = 43750
• 4 years agoHelpfull: Yes(0) No(0)