Question

a person borrow ₹ 5000 for 2 years at 4% p.a. simple interest. he lends to it to another person at 25/4% p.a. for 2 years. find his gain in the transaction per year? it is related to simple interest

Answer 1

P = 5000
T = 2 yr
R = 4%

He has to pay an interest of
SI = PTR/100 = 5000×2×4/100 = ₹400

He lends it to another person.
P = 5000
T = 2 yr
R = 25/4 %

He will get an interest of
SI = PTR/100 = 5000×2×(25/4)/100 = ₹625

His gain = ₹625 - ₹400 = ₹225

Gain per year = 225/2 = ₹112.50