Two banks, A and B, offered loans at 3.5% and 6% per annum, respectively. Chetan borrowed an amount of ₹420000 from each bank. Find the positive difference between the amounts of simple interest paid to the two banks by Chetan after 2 years.

Correct option is A

Given:

Principal borrowed from Bank A = ₹4,20,000

Principal borrowed from Bank B = ₹4,20,000

Rate of interest at Bank A = 3.5% p.a.

Rate of interest at Bank B = 6% p.a.

Time = 2 years

Formula Used:

Simple Interest (SI) = $$\frac{P \times R \times T}{100}$$​

Difference $$=| SI_B - SI_A |$$​

Solution:

SI at Bank A:

​$$SI_A = \frac{420000 \times 3.5 \times 2}{100} = \frac{420000 \times 7}{100} = 29,400$$​

SI at Bank B:

​$$SI_B = \frac{420000 \times 6 \times 2}{100} = \frac{420000 \times 12}{100} = 50,400$$​

Difference = | 50,400 - 29,400 | = 21,000

The positive difference between the interests = ₹21,000