A person borrows Rs. 5000 for 2 year at 4% p.a. simple interest. He immediately lends it to another person at $$6\frac{1}{4}$$ % p.a. for 2 years. Find his gain in the transaction per year.

Solution (By Examveda Team)

$$\eqalign{ & {\text{Gain in 2 years}} \cr & = {\left( {5000 \times \frac{{25}}{4} \times \frac{2}{{100}}} \right) - \left( {\frac{{5000 \times 4 \times 2}}{{100}}} \right)} \cr & = {\text{Rs}}{\text{.}}\left( {625 - 400} \right) \cr & = {\text{Rs}}{\text{. }}225 \cr & \therefore {\text{Gain 1 year}} = {\text{Rs}}{\text{.}}\left( {\frac{{225}}{2}} \right) \cr & = {\text{Rs}}{\text{. }}112.50 \cr} $$