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Directions: Read the following questions carefully and answer them:
1
Akanskha invests Rs. x in insurance which gives her returns at 21% annually and Rs. y in mutual funds which gives her returns of 10% compounded half yearly. If Akanskha gets the same returns from both the investments after 1 year, then what is the square root of the ratio of x to y?
» Explain it
C
Amount earned from insurance after one year;

A1 = (100 + Interest) × Principal = 121% of x

Applying net% effect in the 2nd scenario to get the effective rate of interest compound half-yearly, we get

Net% effect = x + y +  xy %
100

Here, a = b = 5%
= 5 + 5 +  5 × 5  = 10.25%
100

∴    Amount earned from mutual funds

A2 = (100 + interest) × Principal = (100 + 10.25)% = 110.25% of y

Given, A1 = A2

121% of x = 110.25% of y

∴      x   =   110.25  =  441
y 121 484

∴   
x
y
  =  
441
484
  = 21 : 22.

Hence, option C is correct.

2
Irfan borrows a sum of Rs. 64000 at 5% pa compound interest. He repays a certain amount at the end of one year and the balance amount of Rs. 35700 at the end of the second year. What amount does he repay in the first year?
» Explain it
E
Sum = Rs. 64,000

  CI for 1st year =  64,000 × 5  = Rs 3200
100

∴  A = 64,000 + 3200 = Rs. 67,200

let the amount repaid be Rs. x

Then, the sum at the beginning of the 2nd year = 67,200 – x

⇒ 35,700 = 1.05 × (67200 – x) × 1

⇒ x = Rs. 33,200.

Hence, option E is correct.

3
If the compound interest accrued on an amount of Rs. 15,000 in two years is Rs. 2,496, what is the rate of interest p.c.p.a.?
» Explain it
A
Principal (P) = Rs. 15000; CI = Rs. 2496; Time (t) = 2 years.

Let the rate be R% per annum. then,

CI =   [ P ( 1 +   R ) t  – 1 ]  
100  
                    Or
⇒   2496 = 15000 [( 1 +   R ) 2  – 1 ]
100  

⇒   2496  + 1 =  ( 1 +  R ) 2
  ⇒   17496   =   ( 1 +  R ) 2  
15000 100  
15000 100  

⇒   729  =  ( 1 +  R ) 2
625 100  

By comparing,

⇒   ( 27 ) 2   =   ( 1 +  R ) 2   ⇒   27  = 1 +  R  
25   100   25 100

⇒ R =  ( 27 – 1 )  × 100 ⇒ R = 8%
25

Hence, optinon A is correct.

4
What is be the compound interest (in Rs.) accrued on an amount of Rs. 15000 at the rate of 20 per cent annum in two years, if the interest is compounded half-yearly?
» Explain it
D
Rate of interest (half yearly) = 20/2 = 10%

Now, P = 15000, T = 2 = 4 half years

By the net% effect we would calculate the effective compound rate of interest for 4 half years = 46.41% (Refer to sub-details)

Therefore, CI = 46.41% of 15000

CI =  46.41 × 15000  = ₹ 6961.5
100
_________________________________________________________________

Sub-details:

Calculation of effective compound rate of interest for 4 half years will be as follows.

For the first 2 half years, let's apply the net% effect.

Here, x = y = 10%


Net% effect = x + y =  xy  
100

= 10 + 10 +  10 × 10  = 21%
100

Now let's take this 21% as x and 10% as y for the calculation of 3rd half year.

= 21 + 10 +  21 × 10  = 33.1%
100

Similarly, let's take this 33.1% as x and 10% as y for the calculation of 4th half year.

= 33.1 + 10 +  33.1 × 10  = 43.1 + 3.31 = 46.41%
100

_____________________________________________________________________

Traditional Method:

If interest is compounded half-yearly then time (t) = 2 × 2 = 4; r% = 20/2 = 10%

A  =  [ P ( 1 +  R ) t
100  
                    Or
= 15000 [( 1 +  10 ) 4
100  

= 15000 ×  11  ×  11  ×  11  ×  11  = ₹ 21961.5
10 10 10 10

∴     CI = 21961.5 – 15000 = ₹ 6961.5

Hence, optiion D is correct.

5
The compound interest on Rs. 10,000 in 2 years at 4% per annum, the interest being compounded yearly, is
» Explain it
B
Rate of interest = 4%

Therefore, applying the net% effect formula for effective rate of compound interest for 2 years , we get

Net% effect = x + y +  xy %
100

x = y = 4%

= 4 + 4 +  4 × 4  = 8 + .16 = 8.16%    
100

CI = 8.16% of 10,000

=    8.16 × 10000  = ₹ 816
100

Hence, option B is correct,