elect the correct answerA person borrowed Rs.5,000 at 5% rate of interest per annum and immediately lent it at 5.5%. After two years he collected the amount and settled his loan. What is the amount gained by him in this transaction?
Question
elect the correct answerA person borrowed Rs.5,000 at 5% rate of interest per annum and immediately lent it at 5.5%. After two years he collected the amount and settled his loan. What is the amount gained by him in this transaction?
Solution
The person borrowed Rs.5,000 at 5% interest rate per annum. So, the interest he has to pay after two years is:
Interest = Principal amount * Rate of interest * Time Interest = 5000 * 5/100 * 2 = Rs.500
He lent the same amount at 5.5% interest rate per annum. So, the interest he earned after two years is:
Interest = Principal amount * Rate of interest * Time Interest = 5000 * 5.5/100 * 2 = Rs.550
The amount gained by him in this transaction is the difference between the interest he earned and the interest he paid.
Amount gained = Interest earned - Interest paid Amount gained = Rs.550 - Rs.500 = Rs.50
So, the person gained Rs.50 in this transaction.
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