Afnan borrows Rs.6000 at a simple interest rate of 6% per annum and then invests the same amount at compound interest at the identical rate for two years. What is his net gain from this transaction?

Explanation

The income is calculated as the difference between compound interest and simple interest on Rs.6000 at 6% for 2 years. Simple Interest = (6000 × 6 × 2) / 100 = Rs.720. Compound Interest = 6000 × (1 + 0.06)^2 - 6000 = 6000 × 1.1236 - 6000 = Rs.741.60. Therefore, income = 741.60 - 720 = Rs.21.60.