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Rohit borrowed ₹18,000 from Rashmi for 2 years at simple interest at the rate of 15% per annum. Rohit lent this sum to Raunak at the same rate for the same time but at compound interest. Find the profit earned.

1. ₹400
2. ₹405
3. ₹410
4. ₹415

Correct answer: ₹405

Solution

Rohit pays simple interest on ₹18,000 for 2 years at 15%, which is ₹5,400. He earns compound interest on the same principal at the same rate for 2 years, which is ₹5,805. The profit is the difference: ₹5,805 − ₹5,400 = ₹405.

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