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      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.
      A Rs. 800 Correct Answer Incorrect Answer
      B Rs. 900 Correct Answer Incorrect Answer
      C Rs. 1000 Correct Answer Incorrect Answer
      D Rs. 1200 Correct Answer Incorrect Answer
      E Rs. 1400 Correct Answer Incorrect Answer

      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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