Answer to Question #99463 in Financial Math for Muhammad unais

Question

Rasool lent equal sums of money on simple interest for 4 years to Payal at 9% per annum and to Maihar at 8% per annum find the sum lent to each if the interest paid by Maihar is 600 rupees less than that paid by Payal

Answer 1

Its a simple interest question,

Principal amount is the same, time is the same only total interest vary by Rs. 600.00

Interest rate paid by first case say R₁=9%=0.09

Interest paid by second case say R₂=8%=0.08

Total Interest paid by first case say I₁

Total Interest paid by second case say I₂=I₁-600

Principal amount is P

Time is T=4 years

Formulae for total interest

$I=PRT$

Thus

$I/R=PT$

For two different P & T both are same

Thus,

I₁/R₁=I₂/R₂

I₁/0.09=(I₁-600)/0.08

Thus I₁=5400

and I₂=5400-600=4800

By any case we can calculate principal amount

So through first case,

P=I/RT=5400/(0.09x4)=15000

Thus total amount paid by first case( i.e. by payal)=Principal amount+total interest=15000+5400=Rs. 20400

and

Thus total amount paid by second case( i.e. by maihar)=Principal amount+total interest=15000+4800=Rs.19800