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$A$ owes $B$, $\text₹1120$ payable $2$ years hence and $B$ owes $A$, $\text₹1081.50$ payable $6$ months hence. If they decide to settle their accounts forthwith by payment of ready money and the rate of interest be $6\%$ per annum, then who should pay and how much:

  1. $A, \text₹50$
  2. $B, \text₹50$
  3. $A, \text₹70$
  4. $B, \text₹70$
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Answer is B, Rs.50

When P and SI are unknown, formula to calculate the amount $A=P(1+\frac{RT}{100})$

A owes B → 1120 = P$1120=P(1+\frac{2*6}{100})$  → P = Rs.1000

B owes A → $1081.5=P(1+\frac{6*6}{12*100})$ → P = Rs.1050

So, B has to pay Rs.50 to A

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