Multiple choice

Find the value of Q1 and Q2 and state the correct relationship. Quantity I: Simple Interest on a sum of Rs 6200 at the rate of 6% per annum for 5 years Quantity II: Compound Interest on a sum of Rs 6400 at rate of 10% compounded semi-annually for two year.

  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

Calculate SI = PRT/100 = (6200×6×5)/100 = 1860. For CI with semi-annual compounding, rate per period = 10%/2 = 5% and periods = 2×2 = 4. Amount = 6400(1.05)^4 ≈ 7779, so CI = 7779 - 6400 = 1379. Since 1860 > 1379, Quantity I is greater.

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