Multiple choice

A borrowed a sum of Rs.1,60,000 from B at 10% per annum simple interest. At the same time he lent the same sum to C at the same time on compounded interest, compounded semi-annually for 2 years. Find the amount (in Rs.) earned by A in the whole transaction.

  1. 4280

  2. 4281

  3. 2481

  4. 2840

  5. 2829
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A pays simple interest: 160000 × 10% × 2 = Rs 32000. A receives compound interest at 10% semi-annually for 2 years (4 periods): 160000[(1 + 0.05)^4 - 1] ≈ 160000 × 0.21550625 = Rs 34481. Profit = 34481 - 32000 = Rs 2481.

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