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.Solution
Amount due at the end of 2 years
= 80000 × {1 + (5/100)}²
= 80000 × (1.05)²
= 80000 × 1.1025
= Rs. 88,200 So, interest due = 88,200 − 80,000 = Rs. 8,200 Simple interest due after two years = (80,000 × 5 × 2) ÷ 100
= Rs. 8,000 So, loss incurred by Ajay = 8,200 − 8,000 = Rs. 200
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