Question
Amit lent Rs. 25,000 to Rohit at compound interest of
10% p.a. (compounded annually) for 2 years. Rohit however paid him back at simple interest instead of compound interest. Find the difference in the interest to be received by Amit and interest actually received by him.Solution
Amount due at the end of 2 years
= 25000 × {1 + (10/100)}²
= 25000 × (1.1)²
= 25000 × 1.21
= Rs. 30,250 So, interest due = 30,250 − 25,000 = Rs. 5,250 Simple interest due after two years
= (25,000 × 10 × 2) ÷ 100
= Rs. 5,000 So, loss incurred by Amit
= 5,250 − 5,000
= Rs. 250
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