Let amount borrowed be Rs. X
Amount to be paid back = Rs. 1.04X
Amount received due to lending at 6% compound interest payable half -yearly =X(1+6200)2 = 1.0609X
Profit = 1.0609X – 1.04X = 209
0.0209X = 209, X = 10,000; ‘A’ borrowed Rs.10, 000 initially. Option(a)
We see that the answer options are far apart and hence the exact calculations are not required. There is an increase of 2% and he is gaining 209 rupees in one year.Hence the amount has to be close to 10000 and hence the answer.