# Amit Borrowed Rs 16000 at 17 1 2 per Annum Simple Interest. on the Same Day, He Lent It to Ashu at the Same Rate but Compounded Annually. What Does He Gain at the End of 2 Years? - Mathematics

Numerical

Amit borrowed Rs 16000 at $17\frac{1}{2} \%$ per annum simple interest. On the same day, he lent it to Ashu at the same rate but compounded annually. What does he gain at the end of 2 years?

#### Solution

Amount to be paid by Amit:
$\text{ SI }= \frac{PRT}{100}$
$= \frac{16000 \times 17 . 5 \times 2}{100}$
= Rs 5, 600
Amount gained by Amit:
$A = P \left( 1 + \frac{R}{100} \right)^n$
$=\text{ Rs }16, 000 \left( 1 + \frac{17 . 5}{100} \right)^2$
$=\text{ Rs }16, 000 \left( 1 . 175 \right)^2$
= Rs 22, 090
We know that:
CI = A - P
= Rs 22, 090 - Rs 16, 000
= Rs 6090
Amit's gain in the whole transaction = Rs 6, 090 - Rs 5, 600
= Rs 490

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#### APPEARS IN

RD Sharma Class 8 Maths
Chapter 14 Compound Interest
Exercise 14.2 | Q 6 | Page 15