Aptitude - Simple Interest - Discussion

The difference between simple and compound interests.

Simple interest - interest is only on the principal amount.
Compound interest - interest is on both the principal amount and interest owing.

If it were compound interest the answer would have been 115.5 but it's simple interest hence the result is just 115.

The answer is Rs. 115

115 is the right answer. The first thing this question is based on simple interest, so for the second year, interest money will not be added with the rest of the principal money. after one-year total interest will be:

(200 x 5 x 1)/100 = 10 -> first-year interest = 10 Rs -- this money will not add up with principal for next year.

And he paid 100 Rs in the last one year so the rest of the money is 200-100 = 100.
Now we will calculate interest for 100 Rs for 2nd year -- ( 100 x 5 x 1 )/100 = 5 Rs.

So total money after 2nd year he has to pay = ( 100 + 10 + 5 ) = 115.

If simple interest is calculated just on the initial sum then why do we need to calculate it again on the remaining amount, whatever that may be?

Totai interest for two years on the sum = 200*5*2/100 = 20 Rs.
Therefore, sum + SI =200 +20 = 220.

Rs. 220 is the total amount to be paid.
If in the first year Rs. 100 is paid, then in the second year, he should pay 220-100= 120 Rs.
The options given should include 120 Rs.

All other answers are confusing as the SI given by them (first and second year added) is less than that given by formula p*n*r/100 = 200 * 5 * 2/100 = 20 Rs. for two years.

Ans should be 115.5.

Explanation:
We will individually find the amount which has to be paid by man and to find out the amount we will use the simple formula;
Simple interest = Principal amount × rate × year100.


Complete step by step answer:
First, we will calculate the amount that has to be paid after 1st year,
So, according to the question statement.
After 1st year his total outstanding amount would be 200+5%interest over Rs 200.

Outstanding amount = 200 + 200 × 5 × 1100{∵ Amount = P×R×T100}
= 200 + 10,
= Rs 210.

After 1st year his total outstanding amount would be Rs 210 but the man repays Rs 100.

The outstanding amount is Rs 110.
So, after 2nd year his total outstanding amount would be 110 + 5% interest over Rs110.
zoutstanding amount = 110 + 110 × 5 × 1100{∵A=P×R×T100}.
= 110 + 5.5,
= Rs 115.50.

(200*5v1)/100 = 10.
(110*5*1)/100 = 5.5.
110+5.5 = 115.5.

The Basic Rule: Any sum that is paid back to the bank before the last installment is deducted from the principal and not from the interest.

So, the answer is 115 calculated using SI.

->(200*5*1)/100=10.
200+10=210(principal + SI)
He returns 100 at the end of the year,
210-100=110.

->(110*5*1)/100=5.5.
110+5.5=115.50.
He has to pay 115.50 at the end of the second year.

115 is the right answer because simple interest calculates on 100 not on 110. It is not C I.

The Answer is correct.

First, he takes 200$ loan from the bank.

So, for first 1 year duration the interest value is = (200*1*5/100) = 10$.
Then, he gives back $100 so net amount he has on which simple interest will apply is 100 because of simple interest take account only initially invested money.

So, for 2nd-year interest =(100*1*5/100)=5$.
So the total amount he gives back after the end of 2nd year = 100+10+5=115 (Principal amount remaining after 1st year + 1st-year interest+2nd-year interest).

Answer is 115......
SI for 1st year:(200*5)/100=10 (Now this is Interest)
He paid 100/- after 1st year
Now, new Principal becomes:100/-
Interest on 100:(100*5)/100=5
So he has to pay:100+10+5=115