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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 = (20000×10×5)/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 − 20000=10,000.

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