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:

Two equal sums were lent, one at the rate of 11% per annum for five years and the other at the rate of 8% per annum for six years, both under simple interest. If the difference in interest accrued in the two cases is Rs 1008. Find the sum?

 A) Rs. 14,400 B) Rs. 15,600 C) Rs. 14,850 D) Rs. 15,220

Explanation:

Let the required Sum = Rs.S

From the given data,

1008 = [(S x 11 x 5)/100] - [(S x 8 x 6)/100]

=> S = Rs. 14,400.

4 218
Q:

Manu invested an amount of Rs. 14800 at the rate of 7% per annum. After how many years will she obtain a simple interest of Rs.15800?

 A) 16.75 yrs B) 15.25 yrs C) 14 yrs D) 13.5 yrs

Explanation:

We know that,

I = PTR/100

ATQ,

15800 = 14800 x T x 6/100

T = 15800/148x7

T = 15800/1036

T = 15.25 yrs.

6 506
Q:

Arun took a loan of Rs. 29000 with simple interest for as many years as the rate of interest. If he paid Rs. 10440 as interest at the end of the loan period, what was the rate of interest?

 A) 5.5% B) 6% C) 6.5% D) 7%

Explanation:

Principle amount = Rs. 29000

Interest = Rs. 10440

Let rate of interest = r%

=> So, time = r years

According to the question,

10440 = 29000 x r x r/100

290 x r x r = 10440

r x r = 1044/29 = 36

r = 6

Hence, the rate of interest = 6% and time = 6 yrs.

7 331
Q:

A sum of Rs. 2600 is invested at two different rates of interest. The difference between the simple interests got after 4 years is Rs 402.80 at these two rates, what is the difference between the rates of interest?

 A) 1.58 B) 2.63 C) 3.87 D) 4.02

Explanation:

Let the two different rates of interests be r1 and r2 respectively.

From the given data,

Hence, the difference in the interest rates = 3.87

3 425
Q:

On Rs. 3500 invested at a simple interest rate of 7 per cent per annum, Rs. 500 is obtained as interest in certain years. In order to earn Rs. 800 as interest on Rs. 4900 in the same number of years, what should be the rate of simple interest?

 A) 8% B) 7.5% C) 9% D) 8.5%

Explanation:

From the given data,

3500x7xt/100 = 500

=> t = 100/49 years

Now, in the second case

The interest per year = 49/100 x 800 = 392

=> 4900 x 1 x r/100 = 392

=> r = 8%

5 452
Q:

On simple interest an amount becomes Rs. 812 in two years and Rs. 924 in four years. What is the rate of interest on that amount?

 A) 7.2% B) 8% C) 8.5% D) 9.3%

Explanation:

We know,

S.I = PTR/100 where P = principal amount, T = time, R = rate of interest

Here in the given data,

Interest for two years S.I = 924 - 812 = Rs. 112

Now, Principal amount P = 812 - 112 = Rs. 700

Now,

R = S.I x 100/PT

R = 112 x 100/700 x 2

R = 11200/1400

R = 8%

Hence, the rate of interest R = 8%.

0 483
Q:

Gopal borrowed some money at 12% simple interest. If he had to pay back Rs. 1280 after 5 years, in order to clear off the loan. How much did he borrow?

 A) Rs. 800 B) Rs. 620 C) Rs. 560 D) Rs. 480

Explanation:

Let the principle amount be Rs. P

Interest rate = 12%

Total amount he paid after 5 years = Rs. 1280

ATQ,

Hence, the amount he borrowed = P = Rs. 800.

8 962
Q:

The simple interest on Rs.10 for 4 months at the rate of 3 paise per month is

 A) 0.3 Paise B) 1.2 Paise C) 30 Paise D) 3 Paise

Explanation:

Given Principal amount P = Rs. 10

Time T = 4 months

Rate of interest R = 3 ps

Interest I = PTR/100 = (10 x 4 x 3)/100 = 12/10 = 1.2 paise.