A person borrowed Rs.5,000 at 5% rate of interest per annum and immediately lent it at 5.5%. After two years he collected the amount and settled his loan. What is the amount gained by him in this transaction?OptionsRs.25Rs.100Rs.200Rs.50
Question
A person borrowed Rs.5,000 at 5% rate of interest per annum and immediately lent it at 5.5%. After two years he collected the amount and settled his loan. What is the amount gained by him in this transaction?OptionsRs.25Rs.100Rs.200Rs.50
Solution
The person borrowed Rs. 5,000 at a 5% interest rate per annum. So, the interest he has to pay after two years is:
5000 * 5/100 * 2 = Rs. 500
He lent the same amount at a 5.5% interest rate per annum. So, the interest he received after two years is:
5000 * 5.5/100 * 2 = Rs. 550
The gain in this transaction is the difference between the interest he received and the interest he paid:
550 - 500 = Rs. 50
So, the amount gained by him in this transaction is Rs. 50.
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