A person borrows Rs. 5000 for 2 years at 4% p.a. simple interest. He immediately lends it to another person at 6 $$\frac{1}{4}$$ p.a for 2 years. Find his gain in the transaction per year.

Explanation:-

$$\eqalign{ & {\text{Gain}}\,{\text{in}}\,{\text{2}}\,{\text{years}} \cr & = Rs.\,\left[ {\left( {5000 \times \frac{{25}}{4} \times \frac{2}{{100}}} \right) - \left( {\frac{{5000 \times 4 \times 2}}{{100}}} \right)} \right] \cr & = Rs.\,\left( {625 - 400} \right) \cr & = Rs.\,225. \cr & \therefore {\text{Gain}}\,{\text{in}}\,{\text{1}}\,{\text{year}} \cr & = Rs.\,\left( {\frac{{225}}{2}} \right) \cr & = Rs.\,112.50 \cr}$$