Question
Rahul borrowed Rs. 30,000 from his friend at compound interest of 10% p.a., compounding annually. He added Rs. 'P' to this money and lent the total sum to Arjun at simple interest of 10% p.a. for 3 years. If total profit earned by Rahul at the end of 3 years is Rs. 1,950, then find the value of 'P'.
Solution
Interest to be paid by Rahul = 30000 × {(1.1)³ − 1} = Rs. 9,930 So, interest earned by Rahul = 9930 + 1950 = Rs. 11,880 So, 11880 = {(P + 30000) × 10 × 3} ÷ 100 Or, 118800 = 3P + 90000 Or, 3P = 28800 So, P = 9600
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