R lends some money to S on which S pays ₹17,000 more to R. S lends the same money to T, on which T pays 8.5% more to S. What should be the minimum amount (in ₹) that S must borrow so that he does not incur any loss in the process?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 2,00,000.
Given that
R lends some money to S on which S pays ₹17,000 more to R.
S lends the same money to T, on which T pays 8.5% interest to S
i.e. S needs to accumulate at least ₹17,000 to be in no loss
Now,
The minimum amount that S needs to lend to T so that he gets ₹17,000 as interest which he further needs to pay back to R = 17,000/8.5% = ₹2,00,000
Hence, ₹2,00,000 is the minimum amount S needs to borrow which he can further lend to T and get 17,000 as interest(the amount he needs to pay back to R)