Question

11. A man borrows 1000 at 10% p.a. simple interest for 3 years. He immediately lends this
money out at compound interest at the same rate for the same time. What is his gain at the
end of 3 years ?

Answer 1

Answer:

31

Step-by-step explanation:

We know that,

SI = PRT/100.

For borrowing, P = Rs.1000, R = 10% p.a.  and T = 3 years.

SI = (1000 * 10 * 3)/100

   =  300

Then,

A = P + I

   = 1000 + 300

   = 1300

Also, It is said that:

He immediately lends this  money out at compound interest at the same rate for the same time.

We know that,

A = P(1 + r/100)

For lending, P = 1000, R = 10% p.a and Time = 3 years.

A = 1000(1 + 10/100)³

  = 1000(110/100)³

  = 1331

Hence,

Gain = 1331 - 1300

      = 31 for 3 years

Hope it helps!