A money lender borrows money at 4% P.a and pays interest at the end of the year. He lends it at 6% P.a compound interest compounded half-yearly and receives the interest at the end of the year. Thus be gains Rs 104.50 a year. The amount of money he borrows
Q1. A money lender borrows money at 4% P.a and pays interest at the end of the year. He lends it at 6% P.a compound interest compounded half-yearly and receives the interest at the end of the year. Thus be gains Rs 104.50 a year. The amount of money he borrows
Answer: Rs5,000
Explanation: 6% p.a. compounded half-yearly for 1 year gives (1.03)²−1 = 6.09%; gain per rupee = 6.09%−4% = 2.09%; 104.50/0.0209 = Rs. 5000.