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Question : Raja borrowed INR 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?

Option 1: INR 1,080.00

Option 2: INR 1,125.00

Option 3: INR 937.50

Option 4: INR 865.50


Team Careers360 24th Jan, 2024
Answer (1)
Team Careers360 25th Jan, 2024

Correct Answer: INR 937.50


Solution : Given: Raja borrowed INR 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.
We know, Simple interest = $\frac{\text{Principal × Rate × Time}}{100}=\frac{15000\times 13\times 2}{100}=$ INR 3,900
We know, $\text{Total Amount}=\text{Principal}×(1+\frac{\text{Rate}}{100})^{\text{Time}}$
$⇒\text{Total Amount}=15000×[1+\frac{15}{100}]^2$
$⇒ \text{Total Amount}=15000\times \frac{529}{400}=$ INR 19837.50
Compound interest $=19837.50-15000=$ INR 4,837.50
Raja's gain in two years = 4837.50 – 3900 = INR 937.50
Hence, the correct answer is INR 937.50.

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