Harpreet borrowed Rs. 20000 from her friend at 12% per annum simple in

1.	Harpreet borrowed Rs. 20000 from her friend at 12% per annum simple interest. She lent it to Alam at the same rate but compounded annually. Find her gain after 2 years.
Answer» Present value = Rs.20000 Interest rate = 12% per annum Time = 2 years Simple interest (SI) = PRT/100 [where, P = Present value R = Interest rate, T = Time] ∴ SI = (20000 × 12 × 2)/100 ⇒ SI = 200 × 12 × 2 ⇒ SI = 4800 Now, Amount (A) = P (1 + R/100)ⁿ[Where, P = Present value R = Annual interest rate n = Time in years] ∴ A = 20000 (1 + 12/100)² ⇒ A = 20000 (112/100)² ⇒ A = 20000 (1.12)² ⇒ A = 20000 × 1.2544 ⇒ A = 25088 ∴ Amount = Rs.25088 ∴ Compound interest = Rs.(25088 – 20000) = Rs.5088 Now, (CI – SI) = 5088 - 4800 = Rs.288 ∴ The amount of money Harpreet will gain after two years = Rs.288

Harpreet borrowed Rs. 20000 from her friend at 12% per annum simple interest. She lent it to Alam at the same rate but compounded annually. Find her gain after 2 years.

Answer»

Present value = Rs.20000

Interest rate = 12% per annum

Time = 2 years

Simple interest (SI) = PRT/100 [where, P = Present value

R = Interest rate, T = Time]

∴ SI = (20000 × 12 × 2)/100

⇒ SI = 200 × 12 × 2

⇒ SI = 4800

Now,

Amount (A) = P (1 + R/100)ⁿ[Where, P = Present value

R = Annual interest rate

n = Time in years]

∴ A = 20000 (1 + 12/100)²

⇒ A = 20000 (112/100)²

⇒ A = 20000 (1.12)²

⇒ A = 20000 × 1.2544

⇒ A = 25088

∴ Amount = Rs.25088

∴ Compound interest = Rs.(25088 – 20000)

= Rs.5088

Now,

(CI – SI) = 5088 - 4800

= Rs.288

∴ The amount of money Harpreet will gain after two years = Rs.288