Two banks, A and B, offered loans at 3.5% and 6% per annum, respectively. Ajay borrowed an amount of ₹340000 from each bank. Find the positive difference between the amounts of simple interest paid to the two banks by Ajay after 3 years.

Correct option is A

Given:

Loan from Bank A: ₹340,000 at 3.5% per annum

Loan from Bank B: ₹340,000 at 6% per annum

Time period for both loans: 3 years

Formula Used:

The formula for Simple Interest (SI) is:

$$SI = \frac{P \times R \times T}{100}$$​​

where:

P is the principal amount,

R is the rate of interest per annum,

T is the time in years.​

Solution:

Simple Interest for Bank A:

$$SI_A = \frac{340000 \times 3.5 \times 3}{100} \\ \ \\ = \frac{3570000}{100} = ₹35,700$$​​

Simple Interest for Bank B:

$$SI_B = \frac{340000 \times 6 \times 3}{100}\\ \ \\ = \frac{6120000}{100} = ₹61,200$$​​

Difference = |61,200 - 35,700| = ₹25,500