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  • Question
  • A has to pay Rs.220 to B after 1yr. B asks A to pay Rs.110 in cash and defer the payment of Rs.110 for 2 yrs. A agrees to it. If the rate of interest be 10% per annum in this mode of payment:


  • Options
  • A. A gains Rs.11
  • B. There is No gain or loss
  • C. A losses 7.43
  • D. A gains Rs. 7.34

  • Correct Answer
  • A gains Rs. 7.34 

    Explanation

    A has to pay = Present worth of Rs220 due 1yr hence  

    = Rs.[(220 x 100)/100+(10 x 1)] = Rs.200 

     

    A actually pays = Rs.110+PW  of Rs.110 due 2 yrs hence 

    = [110+(110 x 100)] / [100+(10 x 2)] = Rs.192.66  

     

    So, A gains Rs. (200-192.66) = Rs.7.34


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