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Question

A money lender borrows money at 14% p.a simple interest and pays interest at the end of the year. He lends it at 6% p.a compound interest compounded half-yearly and receives the interest at the end of the year. Thus he gains Rs. 104.50 a year. The amount of money he borrows is

A
Rs. 4500
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B
Rs. 5000
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C
Rs. 5500
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D
Rs. 6000
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Solution

The correct option is B Rs. 5000
Let the amount of money he borrows be Rs. x
Then Interest paid by the money lender =x×4×1100= Rs. 4x100
Interest received by the money lender =x[(1+3100)21]
=x[(103)2(100)21]=x[1032100210000]
=x[(103+100)(103100)10000]=609x10000
Given, 609x10004x100=104.50
209x10000=104.50
209x=1045000
x=1045000209= Rs. 5000

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