Question
Rahul secures a loan amounting to Rs. 8,800 from a bank,
which charges an annual simple interest rate of 20%. He then allocates this sum into an investment that yields an annual compound interest of 30%, compounded yearly. Calculate the profit Rahul achieves after two years.Solution
Amount paid to bank at the end of 2nd year = (8800 × 20 × 2)/100 + 8800 = Rs. 12320 Amount received from scheme = 8800 × (1.3)2 = Rs. 14872 Profit received by Rahul = 14872 – 12320 = Rs. 2552
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