Multiple choice

Anita borrows Rs. 1,000 at 10% p.a. simple interest for 3 years. She immediately lends this money at compound interest at the same rate and for the same time. What is her gain at the end of 3 years?

  1. Rs. 40

  2. Rs. 41

  3. Rs. 30

  4. Rs. 31
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D Correct answer
Explanation

Simple interest on 1000 at 10% for 3 years is 300. Compound interest on 1000 at 10% for 3 years is 1000 * (1.1^3 - 1) = 331. The gain is 331 - 300 = 31.

AI explanation

Anita pays simple interest on the Rs. 1,000 principal, calculated as (1000 x 10 x 3) / 100, which equals Rs. 300. She earns compound interest calculated as 1000 multiplied by (1 + 0.10) cubed, resulting in an amount of Rs. 1,331 and interest of Rs. 331. Her gain at the end of 3 years is the difference between the interest she earned and the interest she paid, which is 331 minus 300, resulting in Rs. 31.

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