Aarti has to pay ₹ 440 to Babita after 1 yr. Babita asks Aarti to pay ₹ 220 in cash and defer the payment of ₹ 220 for 2 yr. Aarti agrees to it. If the rate of interest be 10 % per annum, find Aarti's gain or loss?

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Accepted Answer

Money to be paid by Aarti
= PW of ₹ 440 due 1 yr hence
= {440 x 100}/{100 + (10 x 1)} = {440 x 100}/110
= 4 x 100 = ₹ 400
Aarti actually pays ₹ 220 + PW of ₹ 220 due yr hence
i.e. 220 + {(220 x 100) / (100 + 10 x 2)}
=…

Aarti has to pay ₹ 440 to Babita after 1 yr. Babita asks Aarti to pay ₹ 220 in cash and defer the payment of ₹ 220 for 2 yr. Aarti agrees to it. If the rate of interest be 10 % per annum, find Aarti's gain or loss?

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