A person borrows Rs.5000 for 2 years at 4% p.a. simple interest.

A person borrows Rs.5000 for 2 years at 4% p.a. simple interest. He immediately lends it to another person at 61⁄4% p.a for 2 years. Find his gain in the transaction per year.

Quiz

Answer/Solution

112.5

Steps/Work

Explanation :
The person borrows Rs. 5000 for 2 years at 4% p.a. simple interest
Simple interest that he needs to pay = PRT/100=5000×4×2/100=400
He also lends it at 6 1⁄4% p.a for 2 years
Simple interest that he gets = PRT/100=5000×254×21/00=625
His overall gain in 2 years = Rs.625 - Rs.400 = Rs.225
His overall gain in 1 year = 2252 = Rs.112.5
Answer : Option D

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A person borrows $ for years at % p. A. Simple interest. He immediately lends it to another person at ⁄ % p. A for years. Find his gain in the transaction per year.

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