Question

A man borrows Rs 62500 at 8% p.a., simple interest for 2 years. He immediately lends the money out at CI at the same rate and for same time. What is his gain at the end of 2 years?

Answer 1

Case I :
Simple interest = `(62500 xx 8 xx 2)/(100)`
= 10000
Amount 
= Rs.62500 + Rs.10000
= Rs.72500
Case II :
Here P₁ = Rs.62500 and r = 8%
So, Amount after 1 year
= `"P"(1 + "r"/100)`

= `62500(1 + 8/100)`

= `62500 xx (108)/(100)`
= 67500
Thus, P₂ = Rs.67500 and r = 8%
Amount after 2 year
= `"P"(1 + "r"/100)`

= `67500(1 + 8/100)`

= `67500 xx (108)/(100)`
= 72900
Hence, Amount = Rs.72900
Thus, gain in amount
= Rs.72900 - Rs.72500
= Rs.400.