interest Mcqs MCQs

An automobile financier claims to be lending money at simple interest, but he includes the interest every six months for calculating the principal. If he is charging an interest of 10%, the effective rate of interest becomes :_________?

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A. 10%
B. 10.25%
C. 10.50%
D. None of these
✅ The correct answer is option B. 10.25%.
Let the sum be Rs. 100. Then, S.I. for first 6 months = Rs. ( 100 X 10 X 1/100 X 2 ) = Rs. 5. S.I. for last 6 months = Rs. ( 105 X 10 X 1/100 X 2 ) = Rs. 5.25. So, amount at the end of 1 year=Rs.(100 + 5 + 5.25) = Rs. 110.25 Effective rate = (110.25 – 100) = 10.25%.

A sum of Rs. 725 is lent in the beginning of a year at a certain rate of interest. After 8 months, a sum of Rs. 362.50 more is lent but at the rate twice the former. At the end of the year, Rs. 33.50 is earned as interest from both the loans. What was the original rate of interest?

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A. 3.46%
B. 4.5%
C. 5%
D. 6%
✅ The correct answer is option A. 3.46%.
Note: Here, original rate is for 1 year(s); the new rate is for only 4 months i.e.1/3 year(s).