Multiple choice

An amount increases 0.5 times of itself in a time period of 5 years at simple interest per annum. If Rs. 15,000 is to be lent at the same rate of interest compunded annually, then what will be the total amount to be returned after a time period of 2 years?

  1. Rs. 18,200

  2. Rs. 18,400

  3. Rs. 18,150

  4. Rs. 18,000

  5. Rs. 18,250
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

An increase of half the principal in 5 years at simple interest means a total simple interest rate of 50%, or 10% per year. Compounding Rs. 15,000 annually for 2 years gives 15,000 x 1.1^2 = Rs. 18,150.

AI explanation

Since the amount increases by 0.5 times itself in 5 years at simple interest, the simple interest earned is 50% of the principal. The annual rate is 50% / 5, which equals 10%. Using this rate in the compound interest formula for 2 years gives the total amount as 15000 * (1 + 10/100)^2. This calculates to 15000 * 1.21, which equals 18150. The total amount to be returned is Rs. 18,150.

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