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Question

In each of the following questions, read the following questions, read the given statements and compare given two quantities on its basis:

The simple interest accrued on a sum at the rate of 10% p.a. for two years is Rs. 5,000.

Quantity I – What will be the compound interest on the same amount at the same rate for 2 years?

Quantity II – What will be the compound interest on the same amount at 8% p.a. for 3 years?

A Quantity I > Quantity II Correct Answer Incorrect Answer
B Quantity I < Quantity II Correct Answer Incorrect Answer
C Quantity I ≥ Quantity II Correct Answer Incorrect Answer
D Quantity I ≤ Quantity II Correct Answer Incorrect Answer
E Quantity I = Quantity II Correct Answer Incorrect Answer

Solution

Sum = (5000 × 100)/(10 × 2) = Rs. 25,000 Quantity I: CI = 25,000(1 + 10/100)² - 25,000  ⇒ 25,000 ×  110/100×  110/100 – 25,000 ⇒ 30,250 – 25,000 = Rs. 5,250 Quantity II: CI = 25,000(1 + 8/100)³ - 25,000  ⇒ 25,000 ×  108/100×  108/100 ×  108/100 - 25,000 ⇒ 31,492.8 – 25,000 = Rs. 6,492.8 ∴ Quantity I < Quantity II.

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