An automobile financier claims to be lending money at simple interest, but he in

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Question
An automobile financier claims to be lending money at simple interest, but he includes the interest every six months for calculating the principal. If he is charging an interest of 10%, the effective rate of interest becomes:
Options
A. 10%
B. 10.25%
C. 10.5%
D. None of these

Correct Answer

10.25%

Explanation
Let the sum be Rs. 100. Then,

S.I. for first 6 months = Rs.	❨	100 x 10 x 1	❩	= Rs. 5
		100 x 2

S.I. for last 6 months = Rs.	❨	105 x 10 x 1	❩	= Rs. 5.25
		100 x 2

So, amount at the end of 1 year = Rs. (100 + 5 + 5.25) = Rs. 110.25

∴ Effective rate = (110.25 - 100) = 10.25%

More questions

1.
Aarti can do a piece of work in 6 days. In how many days will she complete three time of work of same type?
Options
A. 18 days
B. 21 days
C. 3 days
D. 6 days

4.
Let A = {1, 2, {3, 4}, 5}. Which of the following statements is true?
Options
A. {3, 4} ? A
B. {3, 4} ? A
C. 1 ? A
D. {1, 2, 5} ? A

5.
Two vessels A and B contains milk and water mixed in the ratio 5 : 3 and 2 : 3. When these mixtures are mixed to form a new mixture containing half milk and half water, they must be taken in the ratio ?
Options
A. 2 : 5
B. 3 : 5
C. 4 : 5
D. 7 : 3

7.
A tree is 12 m tall and casts an an 8 m long shadow. At the same time, a flag pole caste a 100 m long shadow. How long is the flag pole?
Options
A. 150 m
B. 200 m
C. 125 m
D. 115 m

9. A certain amount earns simple interest of Rs. 1750 after 7 years. Had the interest been 2% more, how much more interest would it have earned?
Options
A. Rs. 35
B. Rs. 245
C. Rs. 350
D. Cannot be determined
E. None of these

10.
If the hands of a clock coincide in every 65 minutes (true time), in 24 hours the clock will gain:
Options
A. 10 10 minutes. 143
B. 9 12 minutes. 143
C. 11 12 minutes. 143
D. 12 10 minutes. 143

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