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

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.