1. The height of a tree increase every year 1/8 times .If the present height of the tree is 64 cm, then

what will be its height after 2 years?

(a) 76 cm (b) 80 cm (c) 81 cm (d) 84 cm (e) None of these

Solution: (c) .

Initial height = 64

First year = 1/8(64) = 8

So 8+64 = 72cm

Second year = 1/8(72) = 9

So 9+72 = 81cm

2. The Simple Interest on a certain sum for 2 years is Rs.120 and the compound interest is Rs. 129. Find the rate of interest

(a ) 14% (b) 15 % (c ) 12 % (d ) 12 % (e ) Cannot be determined

Solution ; (b).

Interest for first year in Simple Interest and Compound Interest are same

So we need to blind first year interest.

Simple interest for every year will be same

= Simple Interest for 2 years = 120

1 year = 120/2 = 60

So first year interest of Compound Interest = 60

The difference between simple interest and compound interest for 2nd year is ‘a’. So find a is what % of 60

= 9/60 X 100 = 15%

3. At what percentage annual compound interest rate, a certain sum amounts to its 27 times in 3 Years?

( a) 100% (b ) 150 % (c ) 75% (d ) 200% (e) 900%

Solution: (d).

Let the principal be P

N=3

Amount = 27P

= 27P = P ( 1+ R/100)3

While solving

(3)3 = ( 1+R/100)3

Therefore 3 = 1 + R/100

=R/100 = 3-1

So R = 200%

4. Find the least number of complete years in which a sum of money put out at 40% compound interest

will be more than double.

(a) 3yr (b) 4 yr (c) 5yr (d) 8 yr (e) None of these

Solution: (a).

Let the principal be ‘P’

Then P(1+40/100)n > 2P

While solving the above relation , we get

(140/100)n >2 => (7/5)n >2

= (1.4)n > 2

So n = 3

By trail sub the values for n

When n = 3

We get (1.4)3 is >2

Therefore number of years is 3

5. What amount will be received on a sum of Rs.15000 in 1 yrs at 10% per annum, if interest is

compounded half yearly?

(a) 4996.5 (b) 19996.5 (c) 23999.5 (d) 21609.25 (e) None of these

Solution: (5).

P = 15000

N = 1 ½ years N = 3/2

R = 10%, p.a. (for ½ year = 5%)

Since the interest is compounded

½ yearly the formula will be

Amount = P (1+ R/100)2N

= 15000 ( 1 + 5/100) 2 3/2

= 15000 ( 105/100)3

= 15000 x 21/20 x 21/20 x 21/20

= 138915/8

= 17364.375

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