Maths-
General
Easy
Question
Rohit borrows Rs86,000 from Arun for two years at 5% per annum simple interest. He immediately lends out this money to Akshay at 5% compound interest compounded annually for the same period. Calculate Rohit’s profit in the transaction at the end of two years.
Hint:
Find the total amount to be paid by each person at the end of 2 years and then find the profit.
The correct answer is: 215 Rupees
Complete step by step solution:
Case I
Money borrowed from Arun by Rohith = P = 86000 Rupees.
Here we have rate of simple interest R = 5% and number of years T = 2 years.
Interest to be paid by Rohith,
We calculate simple interest by the formula,
…(i)
where P is Principal amount, T is number of years and R is rate of interest
On substituting the known values in (i), we get 
Rupees.
Amount at the end of 2 years = 86000 + 8600 = 94600 Rupees.
Case II
Let the principal amount = P
Here we have rate of simple interest R = 5% and number of years T = 2 years.
We know that 
Amount to be paid by Akshay,
So, total amount after second year = 
Rupees.
∴Rohith’s profit = 94815 - 94600 = 215 Rupees
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