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.

Answer 1

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.