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Ram purchased a flat at Rs. 1 lakh and Prem purchased a plot of land worth Rs. 1.1 lakh. The respective annual rates at which the prices of the flat and the plot increased were 10% and 5%. After two years they exchanged their belongings and one paid the other the difference. Then:

- Ram paid Rs. 275 to Prem
- Ram paid Rs. 475 to Prem
- Ram paid Rs. 2750 to Prem
- Prem paid Rs. 475 to Ram

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Best answer

**After 2 years the price of the flat will be**

1,00,000 * (1 + 10/100)^{2 }= 1,00,000 * (11/10)^{2 }= 1,21,000 [Calculated in compound interest]

**After 2 years the price of the plot of land will be**

1,10,000 * (1 + 5/100)^{2} = 1,10,000 * (105/100)^{2} = 121275 [Calculated in compound interest]

So, the plot has higher price than the flat.

Therefore, **Ram will pay** (121275 - 121000) = **275 rs. to Prem**

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