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Two banks, A and B, offered loans at 5.5% and 6.5% per annum, respectively. Ramesh borrowed an amount of ₹3,00,000 from each bank. Find the positive difference between the amounts of simple interest paid to the two banks by Ramesh after 2 years.
₹4,000
₹2,000
₹6,000
₹8,000
₹6,000
Calculate the difference in interest by directly finding the difference in rates: (R2 - R1) = 6.5% - 5.5% = 1%. Then calculate 1% of the principal for 2 years: (1% of 3,00,000) * 2 = 3,000 * 2 = 6,000.
Principal P = ₹3,00,000, Time T = 2 years, Rate of Bank A R1 = 5.5%, Rate of Bank B R2 = 6.5%
SI=100P×R×T
Calculate the difference in interest by directly finding the difference in rates: (R2 - R1) = 6.5% - 5.5% = 1%. Then calculate 1% of the principal for 2 years: (1% of 3,00,000) * 2 = 3,000 * 2 = 6,000.
Students often calculate the full interest for both banks individually and then subtract, which is prone to arithmetic errors compared to using the rate difference method.
Identify given variables
We have the Principal P=3,00,000, Time T=2 years, and interest rates R1=5.5% and R2=6.5%.
P=3,00,000,T=2,R1=5.5%,R2=6.5%
Calculate the difference in rates
Since the principal and time are the same, the difference in simple interest depends only on the difference in rates: Rdiff=R2−R1.
Rdiff=6.5%−5.5%=1%
Calculate the difference in interest
Apply the SI formula using the rate difference: Difference=100P×Rdiff×T.
Difference=1003,00,000×1×2=6,000
C is correct because the difference in interest is calculated as 1% of ₹3,00,000 over 2 years, which equals ₹6,000.
This concept is frequently used in 'Financial Literacy' sections of competitive exams and aligns with 'Profit and Loss' percentage difference problems.
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