Question
Manoj lent Rs. 60,000 to Ajit at compound interest of
10% p.a. (compounded annually) for 2 years. Ajit returned the amount by calculating simple interest. Find the loss incurred by Manoj.Solution
Amount due at the end of 2 years
= 60000 × {1 + (10/100)}²
= 60000 × (1.1)²
= 60000 × 1.21
= Rs. 72,600 So, interest due = 72,600 − 60,000 = Rs. 12,600 Simple interest due after two years
= (60,000 × 10 × 2) ÷ 100
= Rs. 12,000 So, loss incurred by Manoj
= 12,600 − 12,000
= Rs. 600
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