Govind borrows Rs. 18,000 at 10% simple interest. He immediately invests the money borrowed at 10% compound interest compounded half-yearly. How much money does Govind gain in one year:

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answer is C.

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Detailed Solution

Concept: Simple interest =

\frac{(P \times T \times R)}{100}

simple interest formula is one of the methods of calculating the interest on a certain amount
Given, govind borrows 18,000Rs. at 10% simple interest, time= 1 year

S . I . = \frac{P \times R \times T}{100}

S . I . = \frac{18000 \times 10 \times 1}{100}

S . I . = 1800 Rs .

Rate =10%, half yearly =

\frac{10}{2} = 5 %

Amount =

P {(1 + (\frac{R}{T}))}^{T}

= 18000 {(1 + \frac{5}{100})}^{2}

= 18000 \times \frac{105}{100} \times \frac{105}{100}

= 19845 Rs .

19845 - 18000 = 1845

Difference between S.I. and C.I. =

1845 - 1800 = 45

Rs.
Hence, the correct option is (3) .

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