Vikram borrowed Rs.20000 from a bank at 10% p.a. simple interest. He lent to his friend Venkat are the same rate but compounded annually. Find his gain after two and half years.
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Let us first calculate the amount of money his friend would give him.
Let A be the amount of money at the start of 2nd year.
A = P (1 + r/100)^n
A = 20000 (1 + 10/100) ^ 1
A = 20000 x 1.21
A = 20000 x 1.21 = 24200
amount gained in the subsequent half year = simple intereste for that part.
= P ( 1 + NR / 100)
= 20000 x ( 1 + (0.5 x 10)/100)
= 20000 x ( 0.2)
= 4000
Sum total given by his friend =
= 24200 + 4000
= Rs. 28200
Money he owes the bank
= P ( 1 + NR/100)
= 20000 ( 1 + (2.5 x 10)/100)
= 20000 x 1.25
= 25000.
Profit
= 28200 - 25000
= 3200
Let A be the amount of money at the start of 2nd year.
A = P (1 + r/100)^n
A = 20000 (1 + 10/100) ^ 1
A = 20000 x 1.21
A = 20000 x 1.21 = 24200
amount gained in the subsequent half year = simple intereste for that part.
= P ( 1 + NR / 100)
= 20000 x ( 1 + (0.5 x 10)/100)
= 20000 x ( 0.2)
= 4000
Sum total given by his friend =
= 24200 + 4000
= Rs. 28200
Money he owes the bank
= P ( 1 + NR/100)
= 20000 ( 1 + (2.5 x 10)/100)
= 20000 x 1.25
= 25000.
Profit
= 28200 - 25000
= 3200
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