Mewa Lal borrowed Rs. 20000 from his friend RoopLal at $18 %$ per annum simple interest. He lent it to Rampal at the same rate but compounded annually. Find his gain after 2 years.

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Solution

Principal (P) = Rs. 20000
Rate (R) $= 18 %$ p.a
Period (T) = 2 years
Simple interest $= \frac{P R T}{100}$
$= R s . \frac{20000 \times 18 \times 2}{100} = R s . 7200$
In second case
Interest for the first year
$= \frac{20000 \times 18 \times 1}{100} = R s . 3600$
Amount after one year = Rs. 20000 + Rs. 3600 = Rs. 23600
Or principal for the second year = Rs. 23600
Interest for the second year
$= \frac{23600 \times 18 \times 1}{100} = R s . 4248$
Interest for two years
= Rs. 3600 + 4248 = Rs. 7848
$∴$ Gain = Rs. 7848 - Rs. 7200 = Rs. 648

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Mewa Lal borrowed Rs. 20000 from his friend RoopLal at 18% per annum simple interest. He lent it to Rampal at the same rate but compounded annually. Find his gain after 2 years.

Mewa Lal borrowed Rs. 20000 from his friend RoopLal at $18 %$ per annum simple interest. He lent it to Rampal at the same rate but compounded annually. Find his gain after 2 years.