A cow is bought for Rs. 3,000 and sold the same day for Rs. 3,600 with 2 years credit at 10% simple interest. What is the gain?

Given data

• Cost price (cash) = Rs. 3,000
• Credit selling price after 2 years = Rs. 3,600
• Rate r = 10% p.a., time t = 2 years

Approach

Compute the present worth (PW) of the credit price and compare with cost.

CalculationPW = 3,600 / (1 + 0.10 × 2) = 3,600 / 1.20 = 3,000Gain = PW − Cost = 3,000 − 3,000 = 0

Final AnswerThere is no gain (Rs. 0).