A person borrows Rs. 5000 for 2 years at 4% p.a. simple interest. He immediately lends it to another person at 6¼% p.a for 2 years. Find his gain in the transaction per year.
Aptitude
Simple Interest
Difficulty: Easy
Choose an option
Answer
Correct Answer: Rs. 112.50 per year
Explanation
Given
- Borrows Rs. 5000 @ 4% p.a. for 2 yrs ⇒ Pays SIout
- Lends same Rs. 5000 @ 6¼% p.a. for 2 yrs ⇒ Receives SIin
Step 1: Compute both interestsSIout = 5000 × 4 × 2 ÷ 100 = Rs. 400SIin = 5000 × 6.25 × 2 ÷ 100 = Rs. 625
Step 2: Net gainNet (2 years) = 625 − 400 = Rs. 225Per year gain = 225 ÷ 2 = Rs. 112.50
Final Answer: Net gain per year = Rs. 112.50.