Aptitude Day 193

Problems on Simple Interest:

1. Jimmy borrowed some money at the rate of 3% p.a. for the 1^st 5 years, 5% p.a. for the next 7 years and 8% p.a. for the period beyond 15 years. If the total interest paid by him at the end of 15 years is 2220, how much money did he borrow?

Solution:

                 P*5*3/100 + P*7*5/100 + P*3*8/100 = 2220

                 P/100 [15+35+24] = 2220

                 P = 100*2220/74

                 P = 3000.  

2. A financier claims to be lending money at simple interest, but he includes the interest every six months for calculating the principal. If he’s charging an interest of 20%, the effective rate of interest becomes:

Solution:

                 Let the sum be 100.

                 S.I for the 1^st 6 months = 100*1/2*20/100 = 10.

                 S.I for the 1^st 6 months = 110*1/2*20/100 = 11.

                 The amount at the end of 1 year = 100+10+11 = 121.

                  

                 Effective rate = 121- 100 = 21%