1. 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?

A. There is no gain or loss to anyone B. A gains Rs.7.34 C. A losses Rs.7.34 D. A gains Rs.11

Answer Answer: Option B Explanation: A has to pay = P.W. of rs.220 due 1 year hence = Rs.[220*100/100+(10*1)] = Rs. 200
A actually pays =Rs.110+P.W of Rs. 110 due 2 years hence,
=[110+110*100/100+(10*2)] = Rs.192.66
A gains = Rs.(200-192.66) = Rs.7.34

2. A trader owes a merchant Rs.10,028 due 1 year hence. The trader wants to settle the account after 3 months. If the rate of interest is 12% per annum, how much cash should he pay?

A. Rs.9025.20 B. Rs.9200 C. Rs.9600 D. Rs.9560

Answer Answer: Option B Explanation: Required money =P.W. of Rs. 10028 due 9 months hence
=Rs.{10028*100/100+(12*9/12) = Rs.9200.

5. A bill falls due in 1 year.The creditor agrees to accept immediate payment of the half and to defer the payment of the other half for 2 years.By this arrangement he gains Rs.40.What is the amount of the bill if the money be worth 12 1/2%?

A. Rs.3600 B. Rs.4200 C. Rs.5600 D. Rs.7000

Answer Answer: Option A Explanation: Let the sum be rs.X then,
[x/2+x/2*100/100+(25/2*2)] - x*100/100+(25/2*1) = 40 => x/2+2x/5-8x/9 = 40 => x = 3600
Amount of the bill = Rs.3600