Aptitude - Simple Interest - Discussion

Dear All I am not getting what you are justifying let's have a solution from my end

the person takes loan of Rs. 200 at 5% PA

He returns Rs. 100 at the end of 1 year

Bank will charged interest on Rs 200 for one Year

taht is (200*5*1)/100 comes Rs 10 as interest

But he returned Rs. 100 at the end of the first year hence the total is (90+10=100).

hence still he has taken Rs 110.

Now he clears all his dews at the end of the 2nd year now again Bank will charg interest over Rs 110 for 1 year

Hence interest will be (110*5*1)/100 and taht comes Rs 5.5

hence total amount he has to pay at the end of the 2nd year is (110+5.5 = 115.5)

hence the option D is correct and this given in answer is wrong

115 is correct answer because 10 rupee was remaing from 1 year and for the 2 year the simple interest on 100 rupee will be only 5% so adding 100+remaing year 10+5 % simple interest will be 115

Simple interest is ALWAYS calculated on the original principal.

Compound interest is calculated on the original principal plus the interest accumulated over the years.

If you apply compound interest method u will get 115.5

But if u apply simple interest you will get the correct answer which is 115.

Sahil EEE, B.E(hons) Bits Pilani