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A has to pay $ 22 to B after 1 year. B asks A to pay $ 110 in cash and defers the payment of $ 110 for 2 years. A agrees to it. Counting the rate of interest at 10% per annum in this new mode of payment,
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- there is no gain or loss to anyone.
- A gains $ 7.34
- A loses $ 7.34
- A gains $ 11
Correct Option: B
A has to pay the P.W. of $ 220 due 1 year hence,
which is
| A pays = $ |  |  | = $ 200 | 100 + (10 x 1) |
A actually pays = $ [110 + P.W. of $ 110 due 2 years].
| = $ | | 110 + | | = $ 192.66 | 100 + (8 x 2) |
∴ A gains = $ [200 - 192.66] = $ 7.34.
