Find the Profit or Loss Obtained by Ajay
Ajay takes a loan of Rs. 30,000 from a bank for 8 years at 6.5% rate of interest. Then loans out rs.20,000 for 8 years at 7.5% rate of simple interest. He could loan out the balance only at 5.5% for 8 years. In the entire transaction, did Ajay make or lose money and how much?
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I am assuming that simple interest is used here.
First, let us find the total interest and principal that Ajay has to give to the bank.
I = pnr/100 = 30,000*8*6.5/100 = 15,600.
Total = 15,600+30,000 = 45,600
When he gives the amount as loan - 20,000 and 10,000 at 7.5% and 5.5% interest rates respectively, for 8 years, his interest earnings are
I = 20,000*7.5*8/100 + 10,000*5.5*8/100
I = 12,000 + 4,400 = 16,400
Total earnings = 30,000+16,400 = 46,400.
Therefore, he has earned more than he has given the bank. Hence, his earnings are 46,400 - 45,600 = 800.
Thus, Ajay makes a profit of Rs. 800.
First, let us find the total interest and principal that Ajay has to give to the bank.
I = pnr/100 = 30,000*8*6.5/100 = 15,600.
Total = 15,600+30,000 = 45,600
When he gives the amount as loan - 20,000 and 10,000 at 7.5% and 5.5% interest rates respectively, for 8 years, his interest earnings are
I = 20,000*7.5*8/100 + 10,000*5.5*8/100
I = 12,000 + 4,400 = 16,400
Total earnings = 30,000+16,400 = 46,400.
Therefore, he has earned more than he has given the bank. Hence, his earnings are 46,400 - 45,600 = 800.
Thus, Ajay makes a profit of Rs. 800.
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