Manju borrows Rs.5000 for 2 years at 4% p.a. simple interest from Sudha. She imm

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Question
Manju borrows Rs.5000 for 2 years at 4% p.a. simple interest from Sudha. She immediately lends it to another person at 6 1?4% p.a for 2 years. Find her gain in the transaction per year.
Options
A. Rs. 101
B. Rs. 98.5
C. Rs. 124.3
D. Rs. 112.5

Correct Answer

Rs. 112.5

Explanation

Manju borrows Rs. 5000 for 2 years at 4% p.a. simple interest

She also lends it at 6 1?4% p.a for 2 years

=> Total Gain = 6 1/4% ? 4% = 2 1/4%

So her gain in the transaction for 1 year

= The simple interest she gets for Rs.5000 for 1 year at 2 1?4% per annum

= $\frac{P T R}{100} = \frac{5000 � \frac{9}{4} � 1}{100}$ = Rs. 112.5/ year.