Question

By using the formula, find the amount and compound interest on:

Abhay borrowed Rs 16000 at $7\frac{1}{2}\%$ per annum simple interest. On the same day. he lent it to Gurmeet at the same rate but compounded annually. What does he gain at the end of 2 years ?

Answer 1

$\text{In case of Abhay,}\text{Principal (p) = Rs. 16000}\text{Rate (r)}7\frac{1}{2}\%=\frac{15}{2}\%p.a.\text{Period (t) = 2 years}\therefore \text{S.Interest}=\frac{prt}{100}=Rs.\frac{16000\times 15\times 2}{100\times 2}=Rs.2400\text{In case of Gurmeet,}\text{Principal (p) = Rs. 16000}\text{Rate (r)}7\frac{1}{2}\%=\frac{15}{2}\%p.a.\text{Period (t) = 2 years}\text{Amount (A)}=P{(1+\frac{r}{100})}^n=Rs.16000{(1+\frac{15}{2\times 100})}^2=Rs.16000\times {\left(\frac{43}{40}\right)}^2=Rs.16000\times \frac{43}{40}\times \frac{43}{40}=Rs.18490\text{C.I. = A - P = Rs 18490 - Rs. 16000}=Rs.2490\text{gain to Abhay = Rs. 2490 - Rs. 2400}=Rs.90Ans.$