abhay borrowed Rs 16000 at 15/2 % per annum simple interest. On the same day , he lent it to Gurmeet at the same rate but compounded annually. What does he gain at the end of 2 years?

**For simple interest;**

Principal amount;

*P*= Rs.16000

Rate of interest;

*R*= $\frac{15}{2}$% p.a.

Time;

*T*= 2 years

So S.I. = $\frac{P\times R\times T}{100}=\frac{16000\times 15\times 2}{2\times 100}$ = Rs.2400

So, total amount Abhay has to pay = Rs.16000 + Rs.2400 = Rs.18400

**Considering the given sum when it is compounded annually;**

So, Amount accumulated at the end of 2 years = $P{\left(1+\frac{R}{100}\right)}^{T}=16000{\left(1+\frac{15}{2\times 100}\right)}^{2}=16000{\left(\frac{43}{40}\right)}^{2}=16000\times \frac{43}{40}\times \frac{43}{40}=\mathrm{Rs}.18490$

This means Amount received by Abhay from Gurmeet = Rs.18490

Therefore net gain by Abhay = Rs.18490 - Rs.18400 = Rs.90

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