Question

Arnab borrowed a sum of Rs. 3800 from Bank at 15% per annum on simple interest for 2 years. After adding Rs. 200, he lend to his friend at same rate on compound interest for 2 years. How much he would gain in this transaction after 2 years. 
1. Rs. 150
2. Rs. 140
3. Rs. 120
4. Rs. 230

Answer 1

Correct Answer - Option 1 : Rs. 150

Given 

Arnab borrowed from bank = Rs. 3800 

Rate of interest = 15% 

Formula Used

Simple Interest = Principal × Rate × Time/100

Amount = Principal(1 + R/100)^t  [in case of when interest calculated compoundly]

Interest = Amount - principal

Calculation 

⇒ From 1st condition, 

⇒ Simple Interest = (3800 × 15 × 2)/100

⇒ Simple Interest = 38 × 30 = 1140 

⇒ From 2nd condition,

⇒ Now , principal = 3800 + 200 = Rs. 4000

⇒ Interest = 4000(1 + 15/100)² - 4000

⇒ Interest = 4000[(529/400) - 1]

⇒ Interest = 4000 × 129/400 = 1290 

⇒ Arnab would gain after 2 year = 1290 - 1140 = Rs. 150