Question 137

B borrowed 5,000 from A at 6%, p. a. simple interest and lends it to C at compound interest of 10% p. a. If B collects the money back from C after 2 years and repays A, the profit made by B in the transaction is

Solution

B borrowed Rs. 5,000 from A at 6% SI

=> Interest paid by B after 2 years = $$\frac{5000 * 6 * 2}{100}$$

= Rs. 600

B lent Rs. 5,000 to C at 10% CI

=> Interest collected by B after 2 years = $$5000[(1 + \frac{10}{100})^2 - 1]$$

= $$5000 * \frac{21}{100}$$ = Rs. 1,050

$$\therefore$$ Profit made by B = 1050 - 600 = Rs. 450

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