Question

A merchant borrows G 4,800 @ 6% simple
interest and invests at 7.50% compound
interest. If the transaction is closed at the
end of three years, what is his gain

Answer 1

Answer:

299.03

Step-by-step explanation:

First we will calculate how much he has to return back for the amount borrowed

Principal P=4800, R=6%, T=3

SI=PRT/100=4800×6×3/100

=864

Amount payable = P+SI=4800+864=5664

This amount is invested at 7.50% compound  interest for 3 years

P=4800, R=7.5%, n=3

Amount receivable=P(1+R/100)^n

=4800(1+7.5/100)^3

=4800(1.075)^3

=5963.025≈5963.03

Gain=Amount receivable - Amount payable

= 5963.03 - 5664

=  299.03