Multiple choice

X borrowed Rs. 10,000 from his friend at 15% per annum simple interest. He lent it to Y at the same rate but compounded annually. Find his gain after two years.

  1. 200 Rs.

  2. 185 Rs.

  3. 225 Rs.

  4. 245 Rs.

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

At simple interest, X pays Rs. 13,000 after 2 years (Rs. 10,000 + Rs. 3,000 interest). At compound interest, Y pays Rs. 13,225 (Rs. 10,000 × 1.15²). The difference of Rs. 225 is X's gain from the interest rate differential.

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