Compound Interest- Aptitude Questions and Answers

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The difference between the simple and the compound interest on a certain sum of money at 4% per annum in 2 years is 10 rs. What is the sum ?

A)

5,000


B)

6,000


C)

6,250


D)

7,500



Correct Answer :

6,250


Explanation :

Let the sum is 100 then
S.I. = 100* 4* 2 / 100 = 8
C.I = 100 *(1 + 4/100)2 - 100 = 100*( 26/25) 2 - 100 = 204/25
Difference between C.I and S.I = 204/25 - 8 = 4/25 = .16

So, 0.16 : 10 : : 100 : P
∴ P = (10* 100) / 0.16 = 6250

The effective annual rate of interest corresponding to a nominal rate of 22% per annum payable half-yearly is?

A)

44%


B)

23.21%


C)

46.42%


D)

22%



Correct Answer :

23.21%


Explanation :

Amount = P[1+(R/2)/100]2n , if interest is payable half-yearly

Let the amount is 100 for one year
So, effective amount = 100*(1 + 11/100)2
= 100*(1 + 11/100)*(1 + 11/100)
= 111*1.11
= 123.21

Then, Effective rate = 123.21 -100 = 23.21%

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