(b) Rs 5000
Let the amount of money he borrows be Rs x. Then,
Interest paid by the money lender= \(\frac{X\times4\times1}{100}\)
= Rs \(\frac{4X}{100}\)
Interest received by the money lender
= x\(\Big[\big(1+\frac{3}{100}\big)^2-1\Big]\)
= x\(\Big[\frac{(103)^2}{(100)^2}-1\Big]\)
= x\(\Big[\frac{103^2-100^2}{10000}\Big]\)
= x\(\Big[\frac{103+100)(103-100)}{10000}\Big]\) = \(\frac{609X}{10000}\)
Given, \(\frac{609X}{10000}\)-\(\frac{4X}{100}\) = 104.50
\(\Rightarrow\) \(\frac{209X}{10000}\) = 104.50
\(\Rightarrow\) 209x = 1045000
\(\Rightarrow\) x = \(\frac{1045000}{209}\) = Rs 5000.