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:
121 comments Page 13 of 13.
Akash said:
4 weeks ago
Here.
In a half-yearly case, the rate of interest will be half and the time will double.
R =10/2 = 5%.
Now, use the effective change formula
5 + 5 + 5 × 5/100.
10 + 25/100.
10.25%.
In a half-yearly case, the rate of interest will be half and the time will double.
R =10/2 = 5%.
Now, use the effective change formula
5 + 5 + 5 × 5/100.
10 + 25/100.
10.25%.
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