Discussion
A man buys a watch for Rs. 1950 in cash and sells it for Rs. 2200 at a credit of 1 year. If the rate of interest is 10% per annum, the man:
Answer: B
\[ \text{Amount} = \text{PW}\left(1 + \frac{RT}{100}\right), \qquad \text{TD} = \text{Amount} - \text{PW} \]
\[ \text{PW} = \frac{2200}{1 + \dfrac{10 \times 1}{100}} = \frac{2200}{1.1} = \text{Rs. } 2000 \]
\[ \text{gain} = 2000 - 1950 = \text{Rs. } 50 \]
The headline difference of Rs. 250 overstates the profit: Rs. 200 of it merely compensates for waiting a year at 10%. Only the Rs. 50 remainder is genuine gain.
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