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 5 of 12.
Sanshunoisky said:
9 years ago
Hey there you all take the si as 105 for the next 6 months but note that it will not be simple interest. That will be a compound interest (ci).
Guru said:
9 years ago
I think by taking 105 as the principal amount for last six months, they are partially compounding it. So I think the process is not correct.
Kiran said:
1 decade ago
Total Simple Interest is Rs.5.00+5.25 = 10.25
How can we say that it is a rate of interest whereas it is formula of calulating simple int.
How can we say that it is a rate of interest whereas it is formula of calulating simple int.
(1)
Naznin said:
1 decade ago
@Amit.
Here given that "Effective rate of interest" which is for period of 1 year..effective rate means rate for one year.
Here given that "Effective rate of interest" which is for period of 1 year..effective rate means rate for one year.
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.
Ramesh yadav said:
9 years ago
@Ramesh
10% means 10 for every 100 only, and 10% p.a means 10 for every 100 per annum but they did not mention 10% p.a in question.
10% means 10 for every 100 only, and 10% p.a means 10 for every 100 per annum but they did not mention 10% p.a in question.
Devi said:
1 decade ago
For half of the year we take 1/2 (for 6months) and also by adding another 1/2 for next 6 months we get the total amount for a year.
Sandy said:
9 years ago
If I take P = 10 instead of 100, then the answer will be 1.02%?
Why the value of P be 100?
Guys try to help me, I need answer.
Why the value of P be 100?
Guys try to help me, I need answer.
Patel said:
9 years ago
It was S.I. not a compound interest. then why you have consider the 105rs as a sum of next 6 months?
It should be 100 only.
It should be 100 only.
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%.
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