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The C.I. on a certain sum for 2 years at 10% per annum is Rs. 525. The S.I. on the same sum for double the time at half the rate percent per annum is________?

Correct answer: B. Rs. 500

  • A. Rs. 400
  • B. Rs. 500
  • C. Rs. 600
  • D. Rs. 800

Explanation

For 2 years at 10%, compound interest is P[(1.10)^2 - 1] = 0.21P = Rs. 525, so P = Rs. 2500. The second investment uses double the time, 4 years, and half the rate, 5%, so its simple interest is Rs. 2500 x 5 x 4 / 100 = Rs. 500. The likely mistake is choosing option a, Rs. 400, by using the original 2-year period instead of 4 years.

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