Multiple choice

Each question below contains a statement followed by Quantity I and Quantity II. Find both to find the relationship among them. Mark your answer accordingly. Quantity I: Sum, if the difference between Compound Interest and Simple Interest at 20% rate of interest in 2 years is Rs 800 Quantity II: Sum, if the compound interest of 2 years is Rs 6600 at the rate in which a sum of Rs 125 becomes Rs 216 in 3 years.

  1. Quantity I > Quantity II

  2. Quantity I ≥ Quantity II

  3. Quantity II > Quantity I

  4. Quantity II ≥ Quantity I

  5. Quantity I = Quantity II or Relation cannot be established
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A Correct answer
Explanation

Quantity I: CI - SI for 2 years at 20% = P(1.2² - 1) - P(0.2 × 2) = 0.04P = 800, so P = 20000. Quantity II: Rate r where 125(1+r)³ = 216, so 1+r = 216/125^(1/3) = 6/5, r = 0.2 = 20%. CI = 6600 for 2 years at 20%, so P = 6600/(1.2² - 1) = 6600/0.44 = 15000. Therefore Quantity I (20000) > Quantity II (15000).

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