Multiple choice

Directions: Following questions contains two statements as Statement I and Statement II. You have to determine which statement is/are necessary to answer the question and give answer. What is the principle? Statement I: The difference between the compound interest and simple interest at the end of 2 years is 625. Interest earned from simple interest is 2500 per annum. Statement II: The amount in simple interest triples in 8 years.

  1. The data in statement I alone is sufficient to answer the question, while the data in statement II alone is not sufficient to answer the question.

  2. The data in statement II alone is sufficient to answer the question, while the data in statement I alone is not sufficient to answer the question.

  3. The data either in statement I alone or the data in statement II alone is sufficient to answer the question.

  4. The data given in both statements I and II are not sufficient to answer the question.

  5. The data given in both statements I and II together are necessary to answer the question.
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AI explanation

Using the data in statement I, the annual simple interest is 2500, making the principal equal to 25000 divided by the rate. The two-year difference between compound and simple interest is given by Principal multiplied by Rate squared divided by 10000, so 625 equals Principal multiplied by Rate squared divided by 10000. Substituting the principal gives 625 equals 25000 multiplied by Rate squared divided by (10000 multiplied by Rate), which simplifies to 625 equals 2.5 multiplied by Rate, solving to a rate of 10 percent and a principal of 25000. Statement II only provides the time it takes for the amount to triple, which only gives the rate and not the actual principal, meaning only statement I alone is sufficient.

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