Harpreet borrowed Rs 20000 from her friend at 12% per annum simple interest. She lent it to Alam at the same rate but compounded annually. Find her gain after 2 years.
Principal amount $=$ Rs. 20000
Simple interest $=$ Rs. $\left(\frac{20000 \times 2 \times 12}{100}\right)=$ Rs. 4800
The compound interest can be calculated as follows :
Principal for the first year $=$ Rs. 20000
Interest for the first year $=$ Rs. $\left(\frac{20000 \times 12 \times 1}{100}\right)=$ Rs. 2400
Now, amount at the end of the first year $=$ Rs. $(20000+2400)=$ Rs. 22400
Principal for the second year $=$ Rs. 22400
Interest for the second year $=$ Rs. $\left(\frac{22400 \times 12 \times 1}{100}\right)=$ Rs. 2688
Now, amount at the end of the second year $=$ Rs. $(22400+2688)=$ Rs. 25088
Hence, compound interest $=$ Rs. $(25088-20000)=$ Rs. 5088
Now, CI $-$ SI $=$ Rs. $(5088-4800)=$ Rs. 288
$\therefore$ The amount of money Harpreet will gain after two years is Rs $288 .$