Question

Mr. Senthil borrowed Rs 16,000 at 4% pa on SI and immediately he rent the whole sum to Mr. Bala at 4% pa on CI. What will be the gain of Mr. Senthil after 4 years?​

Answer 1

Solution : Mr. Senthil borrowed Rs 16,000 at 4% pa on SI and immediately he rent the whole sum to Mr. Bala.

Hence,

➜ Principal, P = Rs 16000

➜ Rate of interest = 4 %

➜ Time period = 0 years

Now, by formula of simple interest

➜ S.I. = PRT/100

➜ S.I. = PRT/100

➜ S.I. = {1600 * 4 * 0}/100

➜ S.I. = 0/100

➜ S.I. = 0

➜ Amount = Simple Interest + Principal

➜ Amount = 0 + 1600

➜ Amount = Rs 1600

Hence, Mr. Senthil rent an amount of Rs 1600 to Mr. Bala at 4% pa on CI for four years. Hence,

➜ Principal, P = Rs 16000

➜ Rate of interest = 4 %

➜ Time period = 4 years

Now, by formula;

➜ A = P * {1 + (R/100)}^T

➜ A = 16000 * {1 + (4/100)}⁴

➜ A = 16000 * {(1 * 100)/100 + (4/100)}⁴

➜ A = 16000 * {(100/100) + (4/100)}⁴

➜ A = 16000 * {(100 + 4)/100)}⁴

➜ A = 16000 * {104/100}⁴

➜ A = 16000 * {104⁴/10⁵}

➜ A = (16000/10⁵) * 104⁴

➜ A = (16/10²) * 104⁴

➜ A = 0.16 * 104⁴

➜ A = 0.16 * 116985856

➜ A = Rs 18717736.96

Now,

➜ compound interest = Amount - Principal

➜ compound interest = 18717736.96 - 16000

➜ compound interest = Rs 18701736.96

Answer : Hence, Mr. Senthil will have a profit of Rs 18701736.96 after four years.