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Asked in a 1950 paper

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:

Correct answer: B. gains Rs. 50

  • A. gains Rs. 55
  • B. gains Rs. 50
  • C. loses Rs. 30
  • D. gains Rs. 30

Explanation

The Rs. 2200 received after 1 year is worth Rs. 2200/1.10 = Rs. 2000 today. Compared with the cash cost of Rs. 1950, the gain is Rs. 2000 - Rs. 1950 = Rs. 50. The likely trap is Rs. 250, found by subtracting the two stated prices without allowing for the 10% interest on the one-year credit.

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About Profit and Loss

Profit and loss compare the cost price and selling price of an item, using profit or loss percentages based on the cost price unless stated otherwise. Questions include marked price, discount, successive discounts, commission, and finding an unknown price, with care needed to distinguish discount from loss.

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