Multiple choice

Passage

Directions: Two quantities Quantity I and Quantity II are given in the following question. Compare the two quantities and choose the correct option as per these codes: (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 no relation

Quantity I: Simple interest earned on a sum of Rs. 8,000 at 9% p.a. for 2 years Quantity II: Compound interest earned on a sum of Rs. 7,000 at 7% p.a. compounded half yearly for 2 years

  1. (1)

  2. (2)

  3. (3)

  4. (4)

  5. (5)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Quantity I: SI = 8000 * 0.09 * 2 = 1440. Quantity II: CI = 7000 * (1 + 0.035)^4 - 7000 = 7000 * (1.1475) - 7000 = 8032.5 - 7000 = 1032.5. Quantity I > Quantity II.

AI explanation

Using the simple interest formula SI equals P times R times T divided by 100, Quantity I is 8000 times 9 times 2 divided by 100, which equals Rs. 1440. Using the compound interest formula for half-yearly compounding where the rate is halved and time is doubled, Quantity II is 7000 times (1 + 3.5 divided by 100) raised to the power of 4 minus 7000, which equals approximately Rs. 1031. Therefore, Quantity I is greater than Quantity II.

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