CMA Foundation · Fundamentals of Business Mathematics and Statistics · Time Value of Money and Annuity - Simple and Compound Interest
A sum of money lent at simple interest amounts to Rs 13,600 in 3 years and to Rs 15,200 in 5 years. What is the rate of simple interest per annum?
The rate works out to about 7.14%, which does not match the listed answer, so this question is flawed.
- A8%
- B10%
- C12.5%Correct
- D16%
Explanation
Interest for 2 years = 15,200 - 13,600 = Rs 1,600, so yearly interest is Rs 800. Interest for 3 years = Rs 2,400, so principal = 13,600 - 2,400 = Rs 11,200. Rate = 800/11,200 = 1/14, about 7.14%, which is not an option, so recheck: yearly interest 800 and principal 11,200 give 7.14%.
Did you get it right without looking?
One question tells you little. A timed set on Time Value of Money and Annuity - Simple and Compound Interest shows your real accuracy, how long you take and where you lose marks.
More Time Value of Money and Annuity - Simple and Compound Interest questions
- Mr. Sharma deposits Rs 1,000 at the beginning of each year for 2 years in a bank paying 10% p.a. compound interest. What will be the accumul…
- A sum of money lent at simple interest amounts to Rs 11,800 after 2 years and to Rs 13,000 after 4 years. What is the rate of simple interes…
- A trust will receive Rs 3,000 at the end of each year forever, with the first receipt at the end of year 3. If the interest rate is 25% p.a.…
- A sum of money becomes Rs 13,310 after 3 years and Rs 14,641 after 4 years under annual compounding. What is the original sum invested?
- Rs 25,000 is deposited by Ms. Pooja in a bank at 8% per annum compounded half-yearly. What will be the amount at the end of 1 year?
- At what rate of compound interest per annum will a sum of Rs 8,000 amount to Rs 9,680 in 2 years, with annual compounding?