Question

A money lender borrows money at 4% p.a. and pays interest at the end of the year. He lends it at 6% p.a. compounded half-yearly and receives the interest at the end of the year. Thus, he gains 104.50 a year. The amount of money he borrows, is​

Answer 1

Case (1): Rate( %) = 4 %

Case (2): When interest is compounded half-yearly

New Rate % =62 = 3 %

Time (t2) =1×2=2 years

Effective Rate % for 2 years

=3+3+3×3100=6.09%

Difference in Rates =(6.09−4) = 2.09 %

According to the question,

2.09 % of sum = Rs. 104.50

Sum = Rs.104.502.09×100=Rs.5000

hence the answer is 5,000