A sum of money becomes Rs 11,880 after 4 years and Rs 17,820 after 6 years on compound interest, compounded annually. What is half of the sum (in Rs)?
Ratio A6 / A4 = 17820 / 11880 = 3/2 in 2 years. P * (3/2)^2 = 11880 => P * 9/4 = 11880 => $P = 5280$. Half of sum = 5280 / 2 = Rs 2,640.
✓ Correct Answer: Option B.
A bank offers following 4 schemes for investment of principal P for 1 year: Scheme I (24% p.a. quarterly), Scheme II (24% p.a. half-yearly), Scheme III (24% p.a. annually), Scheme IV (24% p.a. simple interest). Which scheme is most beneficial for a customer?
More frequent compounding gives higher effective returns. Quarterly compounding (Scheme I) yields the highest interest among all options.
✓ Correct Answer: Option B.
The effective annual rate of interest corresponding to a nominal rate of 2% per annum payable half-yearly is:
Half-yearly rate = 2% / 2 = 1%. Effective annual rate = 1 + 1 + (1*1)/100 = 2.01%.
✓ Correct Answer: Option A.
In how many years will Rs 3,000 yield Rs 993 as compound interest at 10% per annum compounded annually?
Effective CI % = (993 / 3000) * 100% = 33.1%. 10% compounded annually for 3 years gives 33.1%. Thus time = 3 years.
✓ Correct Answer: Option C.
In what time will Rs 3,20,000 amount to Rs 4,05,000 if compounded at 12.5% per annum?
$A/P = 405000 / 320000 = 81 / 64$. Rate 12.5% = 1/8, factor = 9/8. Since (9/8)^2 = 81/64, time = 2 years.
✓ Correct Answer: Option A.