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 3 of 12.
Shrawan singh said:
5 years ago
The principal should be 100. It's simple interest not compound interest that interest will be calculated on total amount.
Raghav said:
5 years ago
The effective interest rate should be 10% only and not 10. 25% since it is simple and not compound interest! Correct me If I am wrong.
Shubham said:
5 years ago
It is simple and not compound interest, so effective interest rate should be 10% only.
Psit Kanpur said:
5 years ago
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 // How 105?
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%.
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 // How 105?
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%.
Yashi said:
5 years ago
@Susmita.
Why we take principal 100 for 1 year it is 105 when we calculate the rate in the last?
Why we take principal 100 for 1 year it is 105 when we calculate the rate in the last?
Ashwini said:
5 years ago
Please explain clearly.
Nikhil said:
5 years ago
How come 100 * 2 here? explain.
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.
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.
Aashik said:
6 years ago
Why we should take P as only Rs100.
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