Question

A person borrows Rs. 5000 for 2 years at 4% p.a. simple interest. He immediately lends it to another person at `6 1/4`% p.a for 2 years. Find his gain in the transaction per year.

Options

• Rs. 112.50

• Rs. 125

• Rs. 225

• Rs. 167.50

Answer 1

Rs. 112.50

Explanation:

Gain in 2 years = Rs. `[(5000 xx 25/4 xx 2/100) - ((5000 xx 4 xx 2)/100)]`

= Rs. (625 – 400)

= Rs. 225

∴ Gain in 1 year = Rs. `(225/2)` = Rs. 112.50