CMA Foundation · Fundamentals of Business Mathematics and Statistics · Time Value of Money and Annuity - Simple and Compound Interest
A sum of Rs 15,000 is invested at simple interest for 146 days at 10% per annum. Taking a year as 365 days, what is the interest earned?
The interest is Rs 600. Converting 146 days to years gives 146/365, which is 0.4 year. Simple interest is 15,000 x 10% x 0.4, which equals Rs 600.
- ARs 500
- BRs 600Correct
- CRs 750
- DRs 1,460
Explanation
Time = 146/365 = 0.4 year. Interest = 15,000 x 0.10 x 0.4 = Rs 600. Rs 1,500 would be the full year interest, and Rs 1,460 comes from wrongly using the number of days as years-based value.
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