Aptitude - Simple Interest - Discussion
Discussion Forum : Simple Interest - General Questions (Q.No. 7)
7.
An automobile financier claims to be lending money at simple interest, but he includes the interest every six months for calculating the principal. If he is charging an interest of 10%, the effective rate of interest becomes:
Answer: Option
Explanation:
Let the sum be Rs. 100. Then,
| S.I. for first 6 months = Rs. |  |
100 x 10 x 1 |  |
= Rs. 5 |
| 100 x 2 |
| S.I. for last 6 months = Rs. | |
105 x 10 x 1 | |
= Rs. 5.25 |
| 100 x 2 |
So, amount at the end of 1 year = Rs. (100 + 5 + 5.25) = Rs. 110.25
Effective rate = (110.25 - 100) = 10.25%
Discussion:
118 comments Page 11 of 12.
Akash said:
7 years ago
Please tell me, why calculating compound interest for the second half, (since compound interest is interest on interest).
I think the formula should be pr (2T)/100 because we take interest twice a year.
I think the formula should be pr (2T)/100 because we take interest twice a year.
Bijata said:
7 years ago
The effective rate of interest = [1+I/2]^2 -1,
= [1+0.10/2]^2-1,
= [1.05]^2-1,
= 1.1025 - 1,
= 0.1025*100.
= 10.25%.
Note: ^2= it is said for only six month.
= [1+0.10/2]^2-1,
= [1.05]^2-1,
= 1.1025 - 1,
= 0.1025*100.
= 10.25%.
Note: ^2= it is said for only six month.
Kalpesh sahu said:
7 years ago
eff. interest = ( (1 + r%/(100*t) ) ^ t - 1 )* 100.
r% = rate of interest (10).
t = time divided (in this case = 2).
Soln; ( (1 + 10/(100*2) ) ^ 2 - 1 )* 100,
= ( (1 + 10/200 ) ^ 2 - 1 )* 100,
= ( (1 + 0.05 ) ^ 2 - 1 )* 100,
= ( (1.05)^2 - 1 )*100.
= ( 1.1025 - 1 )*100.
= ( 0.1025)*100,
= 10.25%.
r% = rate of interest (10).
t = time divided (in this case = 2).
Soln; ( (1 + 10/(100*2) ) ^ 2 - 1 )* 100,
= ( (1 + 10/200 ) ^ 2 - 1 )* 100,
= ( (1 + 0.05 ) ^ 2 - 1 )* 100,
= ( (1.05)^2 - 1 )*100.
= ( 1.1025 - 1 )*100.
= ( 0.1025)*100,
= 10.25%.
Jhansi said:
6 years ago
@Kalpesh.
What is eff.interest?
What is eff.interest?
RK Hasan said:
6 years ago
it is compound interest actually,
Amount(A) = P(1+10/(2*100))^(2*1) = P(1.1025).
Interest = nr = r = A-P = 0.1025 = 10.25%.
Amount(A) = P(1+10/(2*100))^(2*1) = P(1.1025).
Interest = nr = r = A-P = 0.1025 = 10.25%.
Aashik said:
6 years ago
Why we should take P as only Rs100.
Nadeem said:
5 years ago
Even if we take P different, say 200, answer is the same,
SI (first 6 month ) = 10,
SI( second 6 month) = 10.5,
Then Rate = 20.5/200 * 100 = 10.25.
SI (first 6 month ) = 10,
SI( second 6 month) = 10.5,
Then Rate = 20.5/200 * 100 = 10.25.
Dharmdev said:
5 years ago
I am not getting this.
Please, anyone, explain me in detail to get it.
Please, anyone, explain me in detail to get it.
Nikhil said:
5 years ago
How come 100 * 2 here? explain.
Ashwini said:
5 years ago
Please explain clearly.
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