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
Explanation:
After 2 years, the price of the flat will be (1)(1.10)2 = Rs.1.21 lakh. Correspondingly the price of the land will be (1.1)(1.05)2 = Rs.1.21275 lakh. Hence, the price of the plot = Rs.(1.21275 – 1.21) lakh = Rs.275 more than that of the flat. Hence, if they exchange, Ram will have to pay this amount to Prem .
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