Question

Sachin borrows Rs. 5,000 for 2 years at 4% p.a. simple interest. He immediately lends money to Rahul at 25/4% p.a. for 2 years. Find the gain of one year by Sachin
1. 110.50
2. 111.50
3. 112.50
4. 113.50

Answer 1

Correct Answer - Option 3 : 112.50

Given:  

First case:

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

Second case:

P = Rs 5000, R = 25/4 %,T = 2 years

Formula used:

S.I = (P × R × T)/100

Where, S.I = Simple interest, R = Rate %, T = Time

Calculation:

Interest paid by Sachin = (5000 × 4 × 2)/100 = Rs. 400

Interest recieved by Sachin = (5000 × 25/4 × 2)/100 = Rs. 225

His gain for two years = Rs.  625 − Rs. 400 = Rs. 225

His gain per two years = Rs. 225/2 = Rs. 112.50

∴ The gain of one year by Sachin is Rs. 112.50