I borrowed ₹12,000 at 6% per annum on simple interest for 2 years. Had I borrowed the sum at 6% per annum on compound interest for the same duration, then what extra amount would have I paid as interest?

₹43.20

Amount = Principal +  Interest

In case of simple interest,

SI = \(\frac{ P × R ×T}{ 100}\)

= \(\frac{ 12000 × 6 ×2}{ 100}\)

= 1440

In case of compound interest,

A = P( 1 + \(\frac{ R}{ 100}\) )n

 = 12000( 1 + \(\frac{ 6}{ 100}\) )²

= 12000(  \(\frac{ 53 }{ 50}\) )²

13483.20

Compound interest = 13483.20 - 12000

= 1483.20

Now, Difference b/w CI and SI = 1483.20  - 1440

= 43.20

The correct answer is Option (2) → ₹43.20