Ram purchases two watches for Rs.3,500. By selling one watch at a profit of 25 percent and the other at a loss of 10 percent he neither earns profit nor suffers loss in the whole transaction. What is the cost price of each watch?

Let the cost prices be x and y, where x + y = 3500. Selling one at 25% profit: 1.25x. Selling other at 10% loss: 0.9y. Total: 1.25x + 0.9y = 3500 (no profit, no loss). Substitute y = 3500 - x: 1.25x + 0.9(3500 - x) = 3500. 1.25x + 3150 - 0.9x = 3500. 0.35x = 350. x = 1000. Then y = 3500 - 1000 = 2500. The cost prices are Rs. 1000 and Rs. 2500, matching option C.