Question

Romesh borrowed a sum of Rs. 245760 at 12.5% per annum, compounded annually. On the same day, he lent out his money to Ramu at the same rate of interest, but compounded semi-annually. Find his gain after 2 years.

Answer 1

Given details are,

Principal (p) = Rs 245760

Rate (r) = 12.5% per annum

Time (t) = 2years

By using the formula,

A = P (1 + R/100) ⁿ

= 245760 (1 + 12.5/100)²

= 245760 (112.5/100)²

= Rs 311040

When compounded semi-annually,

Rate = 12.5/2% = 6.25%

Time = 2×2 years = 4years

By using the formula,

A = P (1 + R/100) ⁿ

= 245760 (1 + 6.25/100)⁴

= 245760 (106.25/100)⁴

= Rs 313203.75

∴ Romesh gain is Rs (313203.75 – 311040) = Rs 2163.75