Govind borrows Rs.18,000 at 10% simple interest. He immediately invests the money borrowed at 10% compound interest compounded half-yearly. How much money does Govind gain in one year ?

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Solution

P = 18000 , R = 10%
SI after one year = 1800010/100 = Rs. 1800
Amount = 19800
When it's invested on CI, Rate for 6 months = 10/2 = 5%
CI for first 6 months = 18000 5/100 = Rs. 900
Amount for 6 months = 18900
CI for next 6 months = 18900 * 5/100 = Rs. 945
Total amount = 19845

His gain = 19845-19800
= Rs. 45

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