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Choose the correct option.
A has to pay Rs. 220 to B after 1 year. B asks A to pay Rs. 110 in cash and defer the payment of Rs. 110 for 2 years. A agrees to it. If the rate of interest be 10% per annum, in this mode of payment :
AThere is no gain or loss to any one
BA gains Rs. 7.34
CA loses Rs. 7.34
DA gains Rs. 11
Answer: Option (Login/Signup)
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STEP-BY-STEP
Amount of money that A has to pay = P.W of Rs. 220 due 1 year hence
= Rs. { ( 220 x 100 ) / [ 100 + ( 10 x 1 ) ] }
= Rs. 200
Amount of money A actually pays = Rs. 110 + P.W of Rs. 110 due 2 years hence
= {110 + ( 110 x 100 ) / [ 100 + (10 x 2 ) ] }
= Rs. 192.66
Therefore, A gains = Rs. ( 200 - 192.66 )
= Rs. 7.34
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