A watch is bought for Rs. 1,950 in cash and sold for Rs. 2,200 on 1-year credit at 10% simple interest. What is the gain or loss?

Given data

• Cost price (cash) = Rs. 1,950
• Credit selling price after 1 year = Rs. 2,200
• Rate r = 10% p.a., time t = 1 year

Concept / Approach

Compare cost with the present worth (PW) of the credit price: PW = A / (1 + r × t)

CalculationPW = 2,200 / 1.10 = 2,000Gain = PW − Cost = 2,000 − 1,950 = 50

Common pitfalls

• Comparing cost with the future amount directly instead of discounting to present worth.

Final AnswerGain of Rs. 50.