Discussion
A man buys a watch for Rs. 2825 in cash and sells it for Rs. 3300 at a credit of 1 year. If the rate of interest is 10% per annum, the man gains:
Answer: B
\[ \text{Amount} = \text{PW}\left(1 + \frac{RT}{100}\right), \qquad \text{TD} = \text{Amount} - \text{PW} \]
The Rs. 3300 arrives a year late, so bring it back to today's money before comparing.
\[ \text{PW} = \frac{3300}{1 + \dfrac{10 \times 1}{100}} = \frac{3300}{1.1} = \text{Rs. } 3000 \]
\[ \text{gain} = 3000 - 2825 = \text{Rs. } 175 \]
The raw difference of Rs. 475 looks like the profit, but Rs. 300 of it is merely the price of waiting a year - which is why Rs. 475 is offered as a distractor.
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