A takes a loan of Rs. 1500 from a bank at the rate of 10% simple interest for 3 years and lends to B at the rate of 15% for the same time period. Find the overall profit of A in the whole transaction.
- AOption (a)
Rs. 375
- BOption (b)
Rs. 275
- COption (c)
Rs. 225
- DOption (d)
Rs. 325
- EOption (e)
Rs. 255
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Correct answer
Rs. 225
Why this answer is correct
Shortcut TrickOverall profit of A = Interest paid by B to A - Interest paid by A to Bank
The overall profit of A = P × [R2 - R1] × T/100,
The overall profit of A = 1500 × [15 - 10] × 3/100
The overall profit of A = Rs. 225
Alternate Method Given:
A takes a loan of Rs. 1500
Rate = 10% and Time = 3 years
A lends Rs. 1500 to B
Rate = 15% and Time = 3 years
Formula Used:
S.I = (P × R × T)/100
Where, P = Principal, R = Rate, T = Time
Calculation:
According to the question
Interest paid by A to the bank (S.I1) = (1500 × 10 × 3)/100
⇒ S.I1 = Rs. 450 ----(i)
Now,
Interest paid by B to A (S.I2) = (1500 × 15 × 3)/100
⇒ S.I2 = Rs. 675 ----(ii)
Now, we have to find the total profit of A
S.I2 - S.I1
⇒ 675 - 450
⇒ 225
∴ The overall profit of A in the whole transaction is Rs.225.