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A money lender borrows INR 40000 at 3% interest rate and lends the same amount at 9% interest rate what is the interest earned by the money lender after 3 years in this transaction if the interest is compounded yearly. (Approximate values for easy calculation) 

A money lender borrows INR 40000 at 3% interest rate and lends the same amount at 9% interest rate what is the interest earned by the money lender after 3 years in this transaction if the interest is compounded yearly. (Approximate values for easy calculation)  Correct Answer 8320

Formula used:

(i) Compouded Amount A = P(1 + R) T

(ii) A = P (1 + R) T           

Given:

(i) P = 40000,

(ii) R = 3%,

(iii) T = 3 Years

Calculations:

⇒ A = 40000 (1 + 0.03) 3 ––––((1.03)3 = 1.092727 ≈ 1.09)

⇒ A = 40000 (1.09)

⇒ A = 43680

CI = 43680 – 40000 = 3680

For P = 40000, R = 9%, T = 3 Years

⇒ A = 40000(1 + 0.09) 3        ------ ((1.09)3 = 1.2950 ≈ 1.30)

⇒ A = 40000(1.30)

⇒ A = 52000

⇒ CI = 52000 – 40000 = 12000

Interest earned = 12000 – 3680

Interest earned = 8320

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