A person borrows Rs. 5000 for 2 years 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.

A. Rs. 112.50

B. Rs. 125

C. Rs. 150

D. Rs. 167.50

Answer: Option A

Solution(By Examveda Team)

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