Question

Amit borrowed Rs$16000$ at $17\frac{1}{2}\%$.Amit borrowed Rs 16000 at $1712\%$ per annum simple interest. On the same day, he lent it to Ashu at the same rate but compounded annually. What does he gain at the end of $2$ years?

Answer 1

Amount to be paid by Amit:

$SI=\frac{PRT}{100}=16000\times 17.5\times \frac{2}{100}=$Rs$5600$

Amount gained by Amit:

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

$A=16000{(1+\frac{17.5}{100})}^2$

$A=50000{\left(1.175\right)}^2$

$A=$ Rs $22090$

We know that:

$CI=A–P=$ Rs $22090–$ Rs $16000=$ Rs $6090$

Amit’s gain in the whole transaction $=$ Rs $6090–$ Rs $5600=$ Rs $490$