# A person gives a loan of 50,000 at a rate of 8% per annum simple interest for 2 years

A person gives a loan of 50,000 at a rate of 8% per annum simple interest for 2 years and another Rs. 50,000 at the same rate compounded annually for 2 years. After 2 years the difference in the amount he gets back is

- 300
- 320
- 360
- 380

**Answer: (2) 320**

**Solution:-**

Principal = Rs.50,000, Rate of Interest = 8%, Time = 2years

Then, Simple Interest = 50,000 x 8 x 2/100

= 500 x 16

= 8,000

Compound Interest = 50,000 x (8/100 + 1)^{2} – 50,000

= 50,000(2/25 +1)^{2} – 50,000

= 50,000 x 27 x 27/25 x 25 – 50,000

= 58,320 – 50,000

= 8,320

Then, the difference of amount he gets back = 8,320 – 8,000

= 320

Hence, the correct answer is option (2) 320.