Multiple choice

In the following questions, two equations Quantity I and Quantity II are given. You have to solve both the equations and give answer. \ Quantity I: If the compound interest on a sum of money for 2 years at 10% per annum is Rs.4200, what is the simple interest on the same sum of money at the same rate and for the same time period? \ Quantity II: A certain sum of money will be amount to Rs.48250 at compound interest in 2 years, the rate of interest for 1st & 2nd year being 6% and 8% respectively, how much compound interest earn if rate of compound interest is 6% only?

  1. Quantity I > Quantity II

  2. Quantity I ≥ Quantity II

  3. Quantity I < Quantity II

  4. Quantity I ≤ Quantity II

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

Quantity I: CI = P[(1 + 0.10)² - 1] = 4200, solving gives P = 20000. SI = 20000 × 0.10 × 2 = 4000. Quantity II: Amount = P(1.06)(1.08) = 48250, solving gives P ≈ 42536. At 6% only, CI = 42536[(1.06)² - 1] = 42536 × 0.1236 ≈ 5257. Comparing: Quantity I (4000) < Quantity II (5257).

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