Question
A person borrows Rs. 5000 for 2 years at 4% p.a. simple interest. He immediately lends it to another person at 6 \(\frac{1}{4}\) p.a for 2 years. Find his gain in the transaction per year.
Answer: Option A
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Gain in 2 years = Rs. \(\left[\left(5000\times\frac{25}{4}\times\frac{2}{100}\right)-\left(\frac{5000\times4\times2}{100}\right)\right]\)
= Rs. (625 - 400)
= Rs. 225.
Therefore Gain in 1 year = Rs. \(\left(\frac{225}{2}\right) = Rs. 112.50\)
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