Question
Sandeep borrowed Rs. 20,000 from his friend at compound interest of 20% p.a., compounding annually. He added Rs. 'K' to this money and lent the total sum to Raj at simple interest of 10% p.a. for 2 years. If total profit earned by Sandeep at the end of 2 years is Rs. 1,200, then find the value of 'K'.
Solution
Interest to be paid by Sandeep = 20000 × {(1.2)² − 1} = Rs. 8,800 So, interest earned by Sandeep = 8800 + 1200 = Rs. 10,000 So, 10000 = {(K + 20000) × 10 × 2} ÷ 100 Or, 100000 = 2K + 40000 Or, 2K = 60000 So, K = 30000
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