A person borrows ₹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.
I = Po*r*t = 5000*0.04*2 = $400.
(25/4)% = 6.25%.
I = 5000*0.0625*2 = $625.
Gain = (625-400)/2yrs. = $112.50
per year.
To find the gain in the transaction per year, we need to calculate the interest earned from lending out ₹5000 for two years at 25/4% p.a. and subtract the interest paid on the borrowed amount of ₹5000 for two years at 4% p.a.
First, let's determine the interest earned from lending out ₹5000 for two years at 25/4% p.a.
Interest earned = Principal (P) x Rate (R) x Time (T)
= ₹5000 x (25/4)% x 2 years
= ₹5000 x (25/4) x (2/100)
= ₹(5000 x 25 x 2) / (4 x 100)
= ₹25000 / 200
= ₹125
Next, let's calculate the interest paid on the borrowed amount of ₹5000 for two years at 4% p.a.
Interest paid = Principal (P) x Rate (R) x Time (T)
= ₹5000 x 4% x 2 years
= ₹5000 x 4 x (2/100)
= ₹5000 x (4 x 2) / 100
= ₹5000 x 8 / 100
= ₹400
Now, let's find the gain in the transaction per year by subtracting the interest paid on the borrowed amount from the interest earned from lending out:
Gain per year = Interest earned - Interest paid
= ₹125 - ₹400
= -₹275
Therefore, the person incurs a loss of ₹275 per year in this transaction.
To find the gain in the transaction per year, we need to compare the amount of interest earned by the person lending the money with the amount of interest paid by the person borrowing the money.
First, let's calculate the interest earned by the person lending the money.
The person lends ₹5000 for 2 years at an interest rate of 25/4% per year.
Interest = (Principal * Rate * Time) / 100
= (5000 * (25/4) * 2) / 100
= (5000 * 25 * 2) / (4 * 100)
= (250000) / (400)
= 625
Therefore, the person earns ₹625 in interest.
Next, let's calculate the interest paid by the person who borrowed the money.
The person borrows ₹5000 for 2 years at an interest rate of 4% per year.
Interest = (Principal * Rate * Time) / 100
= (5000 * 4 * 2) / 100
= (5000 * 8) / 100
= 400
Therefore, the person pays ₹400 in interest.
To find the gain in the transaction per year, we subtract the interest paid from the interest earned and divide it by the number of years.
Gain per year = (Interest Earned - Interest Paid) / Number of Years
= (625 - 400) / 2
= 225 / 2
= ₹112.50
Therefore, the gain in the transaction per year is ₹112.50.