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 7 of 12.
Kapil said:
9 years ago
Why we divide it by 2 for find the simple interest for 6 months?
Sravani said:
9 years ago
If we take 105 as last 6 months principal then it is not simple interest it's like compound interest.
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.
Prashant Singh said:
9 years ago
For those who don't understand why here 2 is multiplied as in a formula, time is mention as a year. So we are taking a month. Then we have to convert into the year by multiplying 1/2.
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.
Ramesh said:
9 years ago
Why has he taken 10% interest rate instead of taking 6 months interest rate?
Time is taken for 6 months but interest is not taken for 6 months.
Time is taken for 6 months but interest is not taken for 6 months.
Pavan said:
9 years ago
Why are we taking only p = 100?
If we take p = 10 can we get the answer?
If we take p = 10 can we get the answer?
Jatin Lalwani said:
9 years ago
No, its wrong.
For first six months, they are using 100.
For next six months, they are using 100 + (interest of previous six months).
This is the concept of Compound interest, not Simple interest!
For first six months, they are using 100.
For next six months, they are using 100 + (interest of previous six months).
This is the concept of Compound interest, not Simple interest!
Nikita said:
9 years ago
For next 6 month why it takes as 105, in simple interest principal which is always same.
Kiran said:
9 years ago
Why p = 100?
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