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      Question

      Ajay lent Rs. 80,000 to Rahul at compound interest of 5%

      p.a. (compounded annually) for 2 years. Rahul tricked Ajay by paying simple interest instead. Find the difference in interest.
      A Rs. 200 Correct Answer Incorrect Answer
      B Rs. 300 Correct Answer Incorrect Answer
      C Rs. 400 Correct Answer Incorrect Answer
      D Rs. 500 Correct Answer Incorrect Answer
      E Rs. 600 Correct Answer Incorrect Answer

      Solution

      Amount due at the end of 2 years
      = 80000 Γ— {1 + (5/100)}Β²
      = 80000 Γ— (1.05)Β²
      = 80000 Γ— 1.1025
      = Rs. 88,200 So, interest due = 88,200 βˆ’ 80,000 = Rs. 8,200 Simple interest due after two years = (80,000 Γ— 5 Γ— 2) Γ· 100
      = Rs. 8,000 So, loss incurred by Ajay = 8,200 βˆ’ 8,000 = Rs. 200

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