A has to pay ₹ 220 to B after 1 year. B asks A to pay ₹ 110 in cash and defer the payment of ₹ 110 for 2 years. A agrees to it. If the rate of interest be 10\% per annum, in this mode of payment
(a)There is no gain or loss to any one
(b)A gains ₹ 7.34
(c)A loses ₹ 7.34
(d)A gains ₹ 11
Answer
Answer (as printed): B
Explanation
A has to pay = P.W. of ₹ 220 due 1 year hence $$=₹\left[\frac{220 \times 100}{100+(10 \times 1)}\right]=₹ 200 .$$ A actually pays $=₹ 110+$ P.W. of $₹ 110$ due 2 years hence $$=\left[110+\frac{110 \times 100}{100+(10 \times 2)}\right]=₹ 192.66 .$$ ∴ A gains $=₹(200-192.66)=₹ 7.34$.
Explanation as extracted from the printed page; notation may be imperfect.