Question

A borrowed 1000 at 10 percent per annum simple interest. He immediately lent whole sum at 10 percent per annum compound interest.At the end of 2 years he would gain

Answer 1

Step-by-step explanation:

For simple interest,

P = ₹1000

R = 10%

T = 2years

Amount he would return to the lender,

A = P[1 + (R×T/100)]

A = 1000[1 + (10×2/100)]

A = 1000 × 6/5

A = ₹1200

For compound interest,

P = ₹1000

R = 10%

T = 2 years

Amount he would receive from the borrower,

A = P(1 + R/100)ⁿ

A = 1000(1 + 10/100)²

A = 1000 × (11/10)²

A = 10 × 11²

A = ₹1210

Now, A had to return ₹1200 to the lender on lender and he got ₹1210 from the borrower. So his gain,

= ₹1210 - 1200

= ₹10

Thus, A gained ₹10

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