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 4 of 12.
Question said:
1 decade ago
If the lender increase interest in every 24 months or 2 years then formula is would be ?
Gautam said:
1 decade ago
The explanation is incorrect.
Actually it is a CI problem.
Let actual rate be r. Effective rate be R.
And time period be n years. Then SI = CI-P.
P*R*n/100 = P(1+r/200)^2n - P.
P*R*n/100 = P[(1+10/200)^2n - 1].
R = [(1.05)^2n - 1]*100/n.
Now if n = 1 then only are = 10.25.
So, correct answer is (D). None of these.
Actually it is a CI problem.
Let actual rate be r. Effective rate be R.
And time period be n years. Then SI = CI-P.
P*R*n/100 = P(1+r/200)^2n - P.
P*R*n/100 = P[(1+10/200)^2n - 1].
R = [(1.05)^2n - 1]*100/n.
Now if n = 1 then only are = 10.25.
So, correct answer is (D). None of these.
Divya Agrawal said:
1 decade ago
If for one year is x. And if calculating with 6 month, for one year it should be 2x?
Kanav gupta said:
1 decade ago
@Divya Agrwal.
As you said for one year it is x. Then for 6 months it is x/2 and thus again for one year is 6 months + 6 months i.e. x/2+ x/2 = x. I know it is little bit confusing.
As you said for one year it is x. Then for 6 months it is x/2 and thus again for one year is 6 months + 6 months i.e. x/2+ x/2 = x. I know it is little bit confusing.
RebelZzz said:
1 decade ago
Anybody please clarify me it. Am not able to understand.
In the question it is mentioned that amount is calculated on simple interest. Then why did the take 105. It 105 take, then it should be CI. Help me please.
In the question it is mentioned that amount is calculated on simple interest. Then why did the take 105. It 105 take, then it should be CI. Help me please.
Manohar said:
1 decade ago
The logic in question is "He includes the interest every six months for calculating the principal". By considering it in 1st 6 months he got 5.00 as S.I.
As per the logic, he included the 5 rs S.I with principal amount and it becomes 105. Effective rate is nothing but (total amount-principal amount). (up to my knowledge).
As per the logic, he included the 5 rs S.I with principal amount and it becomes 105. Effective rate is nothing but (total amount-principal amount). (up to my knowledge).
Pramod Kajla said:
1 decade ago
Time should be mentioned in the question as 1 year.
Pramod Kajla said:
1 decade ago
Time should be mentioned in the question as 1 year.
Rose said:
1 decade ago
Please can anyone give a better explanation.
Bhushan said:
1 decade ago
Hi, we can solve this problem by using compound interest method. Such as interest compounded half yearly.
R = 5%, P = 100.
A = p{1+R/100}^2.
A = 100{1+5/100}^2.
A = 110.25.
R = 5%, P = 100.
A = p{1+R/100}^2.
A = 100{1+5/100}^2.
A = 110.25.
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