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- 21. The present worth of Rs. 242 due in 2 years at 10% per annum compound interest is:
A.Rs. 200
B.Rs. 250
C.Rs. 240
D.Rs. 220
Answer & Explanation
Answer: Option A 
Present worth of Rs. x due T years hence is given by
Present Worth (PW) = x/(1+R/100)T
Present Worth (PW) = 242/(1+10/100)2 = 242/(11/10)2 = Rs. 200
View Answer
- 22. A man borrows Rs. 20,000 at 10% compound interest. At the end of every year he pays Rs. 2000 as part repayment. How much does he still owe after three such installments?
A.Rs.24000
B.Rs.20000
C.Rs.15000
D.Rs.10000
Answer & Explanation
Answer: Option B
Amount after 3 years on Rs.20000 at 10% compound interest
= 20000(1 + 10/100)3 = 20000(11/10)3 = 26620--- (1)
He paid Rs.2000 after 1st year.
Hence Rs.2000 and its compound interest for 2 years (i.e., amount on 2000 after 2 year) need to be reduced from (1)
Similarly, he paid Rs.2000 after 2nd year.
Hence Rs.2000 and and its compound interest for 1 year
(i.e., amount on 2000 after 1 year) need to be reduced from (1)
Similarly, he paid Rs.2000 after 3rd year.
Hence this Rs.2000 also need to be reduced from (1)
Hence, remaining amount
= 26620 − 2000 (1+10/100)2 − 2000(1+10/100)1 − 2000
= 26620 − 2000(11/10)2 − 2000(11/10) − 2000
= 26620 −2420 − 2200 − 2000 = 20000
i.e, he still owes Rs.20000 even after three installments
View Answer
- 23. On what sum will the compound interest for 2 1⁄2 years at 10% amount to Rs. 31762.5?
A.Rs.5000
B.Rs.30000
C.Rs.25000
D.Rs.20000
Answer & Explanation
Answer: Option C
P(1+10/100)2 × (1+(1/2×10)/100) = 31762.5
P(11/10)2 × (21/20) = 31762.5
P = (31762.5 × 20 × 10 × 10)/(21 × 11 × 11)
= (1512.5 × 20 × 10 × 10)/(11 × 11)
= (137.5 × 20 × 10 × 10)/11
= 12.5 × 20 × 10 × 10 = Rs. 25000
View Answer
- 24. The compound interest on Rs. 20,000 at 8% per annum is Rs. 3,328. What is the period (in year)?
A.1 year
B.4 years
C.3 years
D.2 years
Answer & Explanation
Answer: Option D
Let the period be n years.
Amount after n years = Rs.20000 + Rs.3328 = Rs. 23328
P(1+R/100)T=23328
20000(1 + 8/100)n = 23328
20000(108/100)n = 23328
(108/100)n = 23328/20000 = 11664/10000 = (108/100)2
n = 2 years
View Answer
- 25. A tree increases annually by 1⁄5 th of its height. If its height today is 50 cm, what will be the height after 2 years?
A.64 cm
B.84 cm
C.72 cm
D.64 cm
Answer & Explanation
Answer: Option C
This problem is similar to the problems we saw in compound interest.
We can use the formulas of compound interest here as well.
Rate of increase = 1/5 × 100 = 20%
Height after 2 years = P(1+R/100)T
= 50(1 + 20/100)2 = 50(1 + 1/5)2
= 50(6/5)2 = (50 × 6 × 6)/(5 × 5) = 2 × 6 × 6 = 72 cm
View Answer
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