Raja borrowed ₹15,000 on simple interest at the rate of 13% per annum and lent it on compound interest at the rate of 15% per annum, compounded annually. What is Raja's gain in two years?
Answer & explanation
Correct answer: option 3
First case,
Simple interest = \(\frac{P × R × T}{100}\)
= \(\frac{15000 × 13 × 2}{100}\)
= 3900
2nd case,
From the formula for compound interest, we know,
C.I = P(1+$\frac{R}{100})^t$– P
= 15000 [ 1 + \(\frac{15}{100}\) ]² - 15000
= 15000 × \(\frac{23}{20}\) × \(\frac{23}{20}\) - 15000
= 19837.5 - 15000
= 4837.5
Gain of Raju in 2 years = 4837.5 - 3900
= 937.50