Question
Ramesh lent Rs. 40,000 to Suresh at compound interest
of 15% p.a. (compounded annually) for 2 years. Suresh returned the money by calculating simple interest. Find the loss suffered by Ramesh.Solution
Amount due at the end of 2 years
= 40000 × {1 + (15/100)}²
= 40000 × (1.15)²
= 40000 × 1.3225
= Rs. 52,900 So, interest due = 52,900 − 40,000 = Rs. 12,900 Simple interest due after two years
= (40,000 × 15 × 2) ÷ 100
= Rs. 12,000 So, loss incurred by Ramesh
= 12,900 − 12,000
= Rs. 900
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