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      Question

      David takes a loan of Rs. 20000

      from his friend Alex, which he is to return at 10% p.a. simple interest after 5 years. Alex takes a loan from George, which he returns after 2 years at 10% p.a. compound interest. If Alex returns Rs. 24200 to George, then what is the difference between the amount borrowed by Alex from George and the amount returned by David to Alex?
      A Rs 21200 Correct Answer Incorrect Answer
      B Rs 12400 Correct Answer Incorrect Answer
      C Rs10000 Correct Answer Incorrect Answer
      D Rs 21500 Correct Answer Incorrect Answer

      Solution

      Amount David Returns to Alex: Principal: 20000, Rate: 10%, Time: 5 years. Simple Interest = (20000ร—10ร—5)/100 = 10000. Total Amount = 20000+10000=30000.

      Amount Alex Borrowed from George: Returned 24200, Rate: 10%, Time: 2 years. Using Compound Interest formula:

      Difference: Amount returned by David: 30000. Amount borrowed by Alex: 20000 Difference = 30000 โˆ’ 20000=10,000.

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