Prabhat borrowed some money from a bank at 8% p.a simple interest and lended it to Ashish at 12% p.a simple interest. If his profit in 2 years is Rs. 320. What sum of money did he borrow?

Rs. 2000
Rs. 4000
Rs. 6000
Rs. 3000

Correct Answer: Rs. 4000

Explanation:

Let the principal be Rs. P
∴ Amount = Rs. 10080
∴ Simple interest = Amount - Principal = 10080 - P
&because Simple interest = (Principal x Rate x Time) / 100
⇒ 10080 - P = (P x 16 x 5) / 100
⇒ 10080 - P = 4P/5
⇒ 50400 - 5P = 4P
⇒ 50400 = 5P + 4P
⇒ 50400 = 9P
∴ P = 50400/9 = Rs. 5600

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