Question
Download Solution PDFA person borrows Rs. 5000 for 2 years at 4% p.a. simple interest. He immediately lends it to another person at 6\(\frac{1}{4}\)% p.a for 2 years. Find his gain in the transaction per year.
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFFormula Used:
Simple Interest = \(\frac{P\times R\times T }{100}\)
Where P = Principal, R = Rate, T = Time
Calculation:
Using the above formula -
The gain in transaction = Interest received - Interest paid
⇒ Gain = \(\frac{5000\times 25\times 2 }{100\times4}\) - \(\frac{5000\times 4\times 2 }{100}\)
⇒ Gain = 625 - 400 = 225
⇒ Gain per year = 225/2 = 112.5
∴ The correct answer is 112.5
Last updated on Jul 8, 2025
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