A person borrows Rs.20000 at the rate of 6 percent per annum on simple interest for 3 years. He immediately lends it to another person at the rate of 8.5 percent per annum on simple interest for 3 years. What is the value of gain per year?
Answer & explanation
Correct answer: option 2
Original rate = 6% , Increased rate = 8.5%
Increment in rate = 8.5 - 6 = 2.5%
Net gain in 3 years with increase in percentage of rate ,
Simple Interest = \(\frac{Principal ×Rate × Time }{100}\)
= \(\frac{20000×2.5 × 3 }{100}\)
= 1500
Gain per year = \(\frac{1500 }{3}\) = Rs. 500