Answer:
P earned $ 718.85.
Step-by-step explanation:
Given that P borrowed $ 16000 from a person at 12% per annum simple interest and lent the whole amount to Q at the same rate of annually compound interest, to determine how much did he gain after 3 years the following calculation must be performed:
16,000 x 0.12 x 3 = X
1,920 x 3 = X
5,760 = X
16,000 x (1 + 0.12 / 1) ^ 3 = X
16,000 x 1.12 ^ 3 = X
16,000 x 1.404928 = X
22,478.85 = X
22,478.85 - 16,000 = 6,478.85
6,478.85 - 5,760 = X
718.85 = X
Therefore, P earned $ 718.85.
