Siddharth wants to borrow Rs.6000 at rate of interest 6% p.a. at S.I and lend t

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Siddharth wants to borrow Rs.6000 at rate of interest 6% p.a. at S.I and lend the same amount at C.I at same rate of interest for two years. What would be his income in the above transaction?

Answer: Option A

Amount of money Siddharth borrowed at S.I at 6% p.a. for two years = Rs.6,000 He lend the same amount for C.I at 6% p.a. for two years. => Siddharth's income = C.I - S.I = p[1 + r/ 100]ⁿ - p - pnr/100 = p{ [1 + r/ 100]² - 1 - nr/100 = 6,000{ [1 + 6/100]² - 1 - 12/100} = 6,000 {(1.06)²- 1 - 0.12} = 6,000(1.1236 - 1 - 0.12) = 6,000 (0.0036) = 6 * 3.6 = Rs.21.60

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