Multiple choice

A sum of money is invested on compound interest for 2 years on annual rate of 20%. If this money was payable at half yearly rate, then interest would be Rs 482 more. (\newline) I. What will be the compound interest earned at the annual rate of 10% for 4 years on the same amount?(\newline) II. What will be the simple interest earned at the annual rate of 10% for 5 years on the same amount?

  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
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Let principal = P. Annual 20% for 2 years: CI = P(1.2² - 1) = 0.44P. Half-yearly 10% for 4 periods: CI = P(1.1⁴ - 1) ≈ 0.4641P. Difference = 0.0241P = 482, so P = 482/0.0241 ≈ 20000. Quantity I: CI at 10% for 4 years = 20000(1.1⁴ - 1) ≈ 9282. Quantity II: SI at 10% for 5 years = 20000 × 0.10 × 5 = 10000. Since 10000 > 9282, Quantity II is greater. Key distractor: Quantity I seems larger due to compound effect, but the shorter period makes it smaller.

Keep practicing — related questions