A person borrows Rs. 5000 for 2 years at 4% p.a. simple interest. He immediately lends it to another person at 6
% p.a for 2 years. Find his gain in the transaction per year.
papay dey Answered question February 15, 2025
Simple Interest (SI) formula:
SI = (P × R × Time) / 100
Given values:
Borrowing:
P = Rs. 5000
R = 4% per annum
Time = 2 years
SI (borrowing) = (5000 × 4 × 2) / 100
= (5000 × 8) / 100
= 400
Lending:
P = Rs. 5000
R = 6.25% per annum
Time = 2 years
SI (lending) = (5000 × 6.25 × 2) / 100
= (5000 × 12.5) / 100
= 625
Gain in 2 years = SI (lending) – SI (borrowing)
= 625 – 400
= 225
Gain per year = Gain in 2 years / 2
= 225 / 2
= 112.5
His gain in the transaction per year is Rs. 112.50.
papay dey Answered question February 15, 2025
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