A watch is bought for ₹ 1950 in cash and sold for ₹ 2200 on one-year credit. If the interest rate is $10\%$ p.a., find the trader's gain/loss.
Show Hint
- Gains ₹ 5
- Gains ₹ 50
- Loses ₹ 30
- Gains ₹ 30
The Correct Option is B
Solution and Explanation
Step 1: Convert credit price to cash equivalent.
Present value of ₹ 2200 due in $1$ year at $10\%$ p.a.:
$\text{PV}=\dfrac{2200}{1+0.10}=₹ 2000$.
Step 2: Compare with cost.
Effective SP (cash equivalent) $=₹ 2000$, Cost $=₹ 1950$.
Gain $=₹(2000-1950)=₹ 50$.
$\Rightarrow\ \boxed{\text{Gains ₹ 50}}.$
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