Multiple choice

Ajitha borrowed Rs. 90,000 at 10% per annum simple interest. On the same day, she lent the sum to her friend at the same rate but compounded annually. How much does she gain at the end of 3 years?

  1. Rs. 2,907

  2. Rs. 2,970

  3. Rs. 2,800

  4. Rs. 2,790
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Simple Interest = P × R × T = 90000 × 0.10 × 3 = Rs. 27,000. Compound Interest = P(1 + r)^t - P = 90000(1.1)^3 - 90000 = Rs. 29,790. Gain = Compound Interest earned - Simple Interest paid = 29790 - 27000 = Rs. 2,790.

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