1
Q:

A merchant receives an invoice for a motor boat for $20 000 with terms 4/30, n/100. What is the highest simple interest rate at which he can afford to borrow money in order to take advantage of the discount?

A) 247.67 B) 237.67
C) 227.67 D) 215.67

Answer:   A) 247.67



Explanation:

Suppose the merchant will take advantage of the cash discount of 4% of $20 000 = $800 by paying the bill within 30 days from the date of invoice. He needs to borrow $20 000 = $800 = $19 200. He would borrow this money on day 30 and repay it on day 100 (the day the original invoice is due) resulting in a 70-day loan. The interest he should be willing to pay on borrowed money should not exceed the cash discount $800.

 

r=I/pt=21.73%

 

The highest simple interest rate at which the merchant can afford to borrow money is 21.73%. This is a break-even rate. If he can borrow money, say at a rate of 15%, he should do so. He would borrow $19 200 for 70 days at 15%. Maturity value of the loan is $19 200(1+0.15(70/365))=$19 752.33

 

savings would be $20 000 − $19 752.33 = $247.67

Q:

What is the ratio of simple interest earned on certain amount at the rate of 12% p.a. for 9 years and that for 12 years?

A) 1:2 B) 2:3
C) 3:4 D) 4:5
 
Answer & Explanation Answer: C) 3:4

Explanation:
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1 232
Q:

The difference between simple interest on a certain sum at the rate of 6% per annum for 5 years and 6 years is 25.8. What is the sum (in Rs)?

 

A) 480 B)  430
C) 258 D) 516
 
Answer & Explanation Answer: B)  430

Explanation:
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0 173
Q:

What is the ratio of simple interest earned on certain amount at the rate of 12% for 6 years and that for 12 years?

A) 1:2 B) 2:3
C) 3:4 D) 4:5
 
Answer & Explanation Answer: A) 1:2

Explanation:
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1 184
Q:

R borrowed Rs. 1,200 at 13% per annum simple interest. What amount will R pay to clear the debt after 5 years?

A) Rs.1,860 B) Rs.1,800
C) Rs.1,980 D) Rs.2,000
 
Answer & Explanation Answer: C) Rs.1,980

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0 225
Q:

A sum of Rs 4000 becomes Rs 7000 in 6 years at simple interest. If the rate of interest becomes double of itself, then what will be the amount (in Rs) after 6 years?

 

A)  8500 B)  9000
C)  8000 D) 10000
 
Answer & Explanation Answer: D) 10000

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3 167
Q:

A sum of Rs 800 becomes Rs 1000 in 2 years at simple interest. What is the per annum rate of interest (in percent)?

 

A) 12.5   B)  25  
C)  8.5   D)  17
 
Answer & Explanation Answer: A) 12.5  

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2 292
Q:

Sachin lent out Rs 60000 in two parts, first at 4% and the second at 10% interest. The yearly average interest comes out to be 6.4%. What are the amounts (in Rs) that were lent at 4% and 10% respectively?

 

A) 40000, 20000   B) 48000, 12000  
C) 36000, 24000   D) 32000, 28000
 
Answer & Explanation Answer: C) 36000, 24000  

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0 349
Q:

Rs. x invested at 8% simple interest per annum for 5 years yields the same interest as that on Rs. y invested at 7.5% simple interest per annum for 6years. Find x : y.

A) 40:45 B) 5:6
C) 16:15 D) 9:8
 
Answer & Explanation Answer: D) 9:8

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