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1. A owes B, Rs. 1573 payable $1 \frac{1}{2}$ years hence. Also B owes A, Rs. 1444.50 payable 6 months hence. If they want to settle the account forthwith, keeping 14% as the rate of interest, then who should pay and how much ?

A. A Rs. 28.50

B. B Rs. 37.50

C. A Rs. 50

D. B Rs. 50

Solution:

A owes = P.W. of Rs. 1573 due

\frac{3}{2}

years hence

\begin{aligned} = Rs . [\frac{1573 \times 100}{100 + (14 \times \frac{3}{2})}] \\ = Rs . (\frac{1573 \times 100}{121}) \\ = Rs . 1300. \end{aligned}

B owes = P.W. of Rs. 1444.50 due 6 months hence

\begin{aligned} = Rs . [\frac{1444.50 \times 100}{100 + (14 \times \frac{1}{2})}] \\ = Rs . (\frac{1444.50 \times 100}{107}) \\ = Rs . 1350. \\ ∴ B must pay Rs . 50 to A \end{aligned}

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