Multiple choice

In a particular bank, returns on deposits are paid at simple interest. But if the amount is not withdrawn for 5 years, then at the end of 5 years, the investor is also paid a bonus which is one fourth of the total interest accrued. If a person deposits Rs. P and withdraws an amount equal to P at the end of every five years, then what is the interest earned in the 50-year period? Take the rate of interest at 16% per annum.

  1. 20P

  2. 10P

  3. 25P

  4. 50P

  5. 15P
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The interest is 16% per annum. In 5 years, simple interest on P is 0.16 * 5 * P = 0.8P. Bonus is 1/4 of interest = 0.2P. Total gain every 5 years = 0.8P + 0.2P = P. Over 50 years, there are 10 such periods, so total interest is 10 * P = 10P.

AI explanation

The simple interest accrued on principal P for 5 years at 16% is (P * 16 * 5) / 100 = 0.8P. The bonus paid at the end of 5 years is one fourth of this interest, which is 0.2P, making the total return per 5-year period equal to 1P. Over a 50-year period, there are 10 such 5-year cycles, so the total interest earned is 10P.

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