Ruchi borrowed €18000 from her friend at the rate of 12./. per annum at simple interest. she lent it further to another friend Aarti at the same rate but compound interest per annually. find the profit that Ruch earns after 2years.
Answers
(i) How much Ruchi owes her friend (Simple Interest)
(ii) How much Ruchi gets from Aarti (Compound Interest)
(i)
Principal Amount = €18000
Rate = 12% p.a. (Simple Interest)
Time = 2 years
S.I. = (P*R*T)/100
=> S.I. = (18000*12*2)/100
=> S.I. = €4320
=> Ruchi has to pay back € (18000+4320)
= €22320
(ii)
Principal Amount = €18000
Rate = 12% p.a.
Time = 2 years
C.I. = P(1+(R/100))ⁿ,
Where n is the number of years
=> Amount = €18000(1+(12/100))²
=> Amount = €18000(112/100)²
=> Amount = €18000((112/100)(112/100))²
=> Amount = €22579.20
C.I. = €(22579.20 - 18000)
=>C.I. = €4579.20
Therefore, the profit earned by Ruchi = €(4579.20 - 4320) OR €(22579.20 - 22320)
= €259.20
Conclusion: Ruchi is unethical; Don't be like Ruchi.
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