Multiple choice

Find the correct relationship between the given quantities: Quantity I: Compound interest 2 years from now, if 2 years ago, a sum of Rs.2000 was compounded annually, amounts to Rs. 2420 at present. Quantity II: 92.82% of Simple interest, calculated on a sum of Rs.2000 @ 5% rate of interest, calculated for a period of decade or more.

  1. Quantity II > Quantity I

  2. Quantity I ≥ Quantity II

  3. Quantity I > Quantity II

  4. Quantity I ≤ Quantity II

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

Quantity I: 2000 grows to 2420 in 2 years at r% compounded annually. 2000(1+r/100)² = 2420, so (1+r/100) = 1.1, giving r = 10%. CI for next 2 years = 2420(1.1)² - 2420 = 292.82 - 2420 = 292.82. Quantity II: SI on Rs 2000 at 5% for 10 years = 2000×5×10/100 = 1000. 92.82% of 1000 = 928.2. 928.2 > 292.82.

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