Vikram borrowed rs.20000 from a bank at 10% per annum simple interest.

1.	Vikram borrowed rs.20000 from a bank at 10% per annum simple interest.He lent it to his friend Venkat at the same rate but compounded annually.Find his gain after 2 1/2 years
Answer» Answer: RS 380 Rs 410 Step-by-step explanation: Simple interest = P * R * n/100 P = Principle = Rs 20000 R = 10% per annum n = 2.5 Years Simple interest for 2.5 Years = 20000 * 10 * (2.5)/100 = Rs 5000 Compound interest = P ( 1 + r/100)ⁿ -p 20000(1 + 10 \100)^ 2.5 - 20000 by solving this we get 5380 Gain = Compound interest - Simple Interest => Gain = 5380 - 5000 => Gain = Rs 380 This is based on FORMULA of compound interest as this formula start compounding for a smaller PERIOD than compounding period but in actual compounding is done at per mentioned period only But if we do it other way Simple interest & Compound interest for 1st year = Equal = 20000 * 10 * 1/100 = Rs 2000 in SECOND year Simple interest = Rs 2000 again now compound interest will be calculated on interest gained also but compound interest = (20000 + 2000) * 10 * 1/100 = Rs 2200 Additional Compound interest = Rs 200 in 3rd year for 6 months = (0.5 Years) Simple interest = 20000 * 10 * 0.5/1000 = 1000 Compound interest = (20000 + 2000 + 2200) * 10 * 0.5/100 = 1210 Extra interest in 6 months for 3 rd year = 1210 - 1000 = Rs 210 Total extra interest = Rs 200 + 210 = 410 Gain = Rs 410 *Here* is ur *answer* *hope* *it's* *helps* u

Vikram borrowed rs.20000 from a bank at 10% per annum simple interest.He lent it to his friend Venkat at the same rate but compounded annually.Find his gain after 2 1/2 years

Answer»

RS 380

Rs 410

Step-by-step explanation:

Simple interest = P * R * n/100

P = Principle = Rs 20000

R = 10% per annum

n = 2.5 Years

Simple interest for 2.5 Years = 20000 * 10 * (2.5)/100 = Rs 5000

Compound interest = P ( 1 + r/100)ⁿ -p

20000(1 + 10 \100)^ 2.5 - 20000

by solving this we get 5380

Gain = Compound interest - Simple Interest

=> Gain = 5380 - 5000

=> Gain = Rs 380

This is based on FORMULA of compound interest

as this formula start compounding for a smaller PERIOD than compounding period but in actual compounding is done at per mentioned period only

But if we do it other way

Simple interest & Compound interest for 1st year = Equal

= 20000 * 10 * 1/100 = Rs 2000

in SECOND year

Simple interest = Rs 2000 again

now compound interest will be calculated on interest gained also

but compound interest = (20000 + 2000) * 10 * 1/100 = Rs 2200

Additional Compound interest = Rs 200

in 3rd year for 6 months = (0.5 Years)

Simple interest = 20000 * 10 * 0.5/1000 = 1000

Compound interest = (20000 + 2000 + 2200) * 10 * 0.5/100

= 1210

Extra interest in 6 months for 3 rd year = 1210 - 1000 = Rs 210

Total extra interest = Rs 200 + 210 = 410

Gain = Rs 410

Here is ur answer hope it's helps u