Question

A person borrows Rs $5000$ for two years at $4\%$ per annum simple interest. He immediately lends to another person at $6\frac{1}{4}$% per annum for $2$ years. Find his gain in the transaction per year.

• A. Rs $226.50$
• B. Rs $172.50$
• C. Rs $112.50$
• D. Rs $95.50$

Answer 1

The correct option is C Rs $112.50$

First case:

$P=$ Rs. $5000,R=4\%,T=2$ years

Interest paid by him $=$ Rs $\frac{5000\times 4\times 2}{100}=$ Rs $400$

Second case:

$P=$ Rs $5000,R=\frac{25}{4}\%,T=2$ years

Interest he received $=$ Rs $\frac{5000\times 6\frac{1}{4}\times 2}{100}=$ Rs $\frac{5000\times 25\times 2}{100\times 4}=$ Rs $625$

$\therefore$ his gain for two years $=$ Rs $625-$ Rs $400=$ Rs $225$

His gain per year $=$ Rs $\frac{225}{2}=$ Rs $112.50$

Hence, option C is correct.