A person borrows Rs. 5000 for 2 years at 4% p.a. simple interest. He immediately lends it to another person at 6.25% p.a for 2 years. Find his gain in the transaction per year.

A. Rs. 112.50

B. Rs. 125

C. Rs. 150

D. Rs. 167.50

View Answer

1

Correct Answer :
Rs. 112.50

Explanation :

Interest to be paid by the person = 5000 x 4 x 2 /100 = Rs. 400/-

Interest he receives = 5000 x 6.25 x 2 /100 = Rs. 625/-

His total gain for 2 years = 625 - 400 = 225

So, his gain per year = 225/2 = Rs. 112.50/-

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