1.
What annual payment will discharge a debt of Rs. 6450 due in 4 years at 5% simple interest?
• A.
Rs. 1400
• C.
Rs. 1550
• B.
Rs. 1500
• D.
Rs. 1600
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Explanation :

Let the annual instalment be Rs. x. Then,

x +
 x x 3 x 5 100
+ x +
 x x 2 x 5 100
+ x +
 x x 1 x 5 100
+ x = 6450

23x + 22x + 21x  + x = 6450
20 20 20

 86x = 6450 x 20

 x = 1500.

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2.
An automobile financier claims to be lending money at the 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 :
• A.
10%
• C.
10.5%
• B.
10.25%
• D.
None of these
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Explanation :

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%.

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3.
A lends Rs. 2500 to B and a certain sum to C at the same time at 7% per annum simple interest. If after 4 years, A altogether receives Rs. 1120 as interest from B and C, then the sum lent to C is:
• A.
Rs. 700
• C.
Rs. 4000
• B.
Rs. 1500
• D.
Rs. 6500
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Explanation :

 Let the sum lent to C be Rs. x, Then, 2500 x 7 x 4 + x x 7 x 4 = 1120 100 100

7 x  = (1120 - 700)
25

x = 420 x 25  = 1500.
7

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4.
A sum of Rs. 10 is given as a loan to be returned in 6 monthly installments at Rs.3. What is the rate of interest?
• A.
640%
•  C. 640 % 3
•  B. 640 % 7
• D.
610%
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Explanation :

Amount borrowed = Rs. 10;

 Interest for 6 months = 10 x 1 x r = r 2 100 20

No. of Instalments = 6 monthly

Amount of Instalment = Rs.3

Interest by way of instalments = 3 x 6 x 5 x r = 3r
2 x 12 100 80

Amount should be equal

10+ r  = 18 + 3r   r = 640
20 20

r = 640%

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5.
Rs. 7500 is to be paid in 3 years at 5% C.I. in equal annual Instalments.
Find the amount of each instalment.
• A.
2754
• C.
2574
• B.
2457
• D.
4257
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Explanation :

Let the annual instalment be "a"

i.e., a includes P and interest

We know that a = p

1 +
 I 100
n

P = a
1+
 I 100
n

Total to be paid = 7500

a
 +
a
 +
a
 = 7500

1+
 5 100
1+
 5 100
2
1+
 5 100
3

 a 20 + 20 2 + 20 3 = 7500 21 21 21

 a 20 + 1+ 20 + 400 = 7500 21 21 441

 a = 7500 x 21 441 20 441+420+400

 = 7500 x 21 x 441 = 2754 20 1261

 Annual Instalment = Rs. 2754

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