When he lend it to her sister;
Interest, I=100P×R×T=1002500×10×1=2500
When he lend it to the bank;
r=6%/4=1.5%,n=1×4=4,P=25000
A=P(1+r/100)n=25000(1+1.5/100)4=26534.09
Interest earned= A-P=26534.09-25000=1534.09
Additional interest earned =2500-1534.09=965.91
Calculation for effective interest rate:
Effective interest rate, r = (1+i/n)n−1
For the sister r=(1+0.1/4)4−1=0.1038=10.38%
For the bank r=(1+0.06/1)1−1=0.06=6%
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