Multiple choice

Each question contains a statement followed by Quantity I and Quantity II. Read the contents clearly and answer your questions accordingly. Quantity I: The simple interest on a certain sum of money for 5 years at 8% per annum is Rs.7500. Then find the principal. Quantity II: The compound interest on a certain sum of money for 2 years at 20% per annum is Rs.8800. Then find the principal.

  1. Quantity II > Quantity I

  2. Quantity I ≥ Quantity II

  3. Quantity I > Quantity II

  4. Quantity II ≥ Quantity I

  5. Quantity I = Quantity II or Relation cannot be established
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Quantity I: SI = P*R*T/100. 7500 = P*8*5/100, so P = 7500*100/40 = Rs.18,750. Quantity II: CI = P[(1+R/100)^n - 1]. 8800 = P[(1.2)^2 - 1] = P[1.44 - 1] = 0.44P. So P = 8800/0.44 = Rs.20,000. Since 20,000 > 18,750, Quantity II is greater. Option A is correct.

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