A borrowed ₹58,000 from B at 8% per annum simple interest for 2 years. He lent the same sum to C at 10% per annum compound interest, compounded annually for 2 years. How much did he earn (in ₹) in the transaction at the end of 2 years?
- A3,000
- B2,800
- C2,900
- D2,750
Solution & Step-by-step Explanation
Let's find the interest paid and interest earned separately.
Interest paid by A to B (Simple Interest):
SI=
100
P×R
1
×T
=
100
58000×8×2
=580×16=₹9,280
Interest earned by A from C (Compound Interest):
CI=P[(1+
100
R
2
)
T
−1]=58000[(1+
100
10
)
2
−1]
CI=58000[1.21−1]=58000×0.21=₹12,180
Net earnings of A in the transaction:
Earnings=CI−SI=12180−9280=₹2,900
Interest paid by A to B (Simple Interest):
SI=
100
P×R
1
×T
=
100
58000×8×2
=580×16=₹9,280
Interest earned by A from C (Compound Interest):
CI=P[(1+
100
R
2
)
T
−1]=58000[(1+
100
10
)
2
−1]
CI=58000[1.21−1]=58000×0.21=₹12,180
Net earnings of A in the transaction:
Earnings=CI−SI=12180−9280=₹2,900