Interest Question Answers

Interest - Quant/Math - CAT 2008

Question 4 the day: July 9, 2003

The question for the day is from the topic of Interest.

How long will it take for a sum of money to grow from Rs.1250 to Rs.10,000, if it is invested at 12.5% p.a simple interest?

(1)	8 years			(2)	64 years
(3)	72 years			(4)	56 years

Correct Answer - (4)

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Solution:


Simple interest is given by the formula SI = (pnr/100), where p is the principal, n is the number of years for which it is invested, r is the rate of interest per annum

In this case, Rs. 1250 has become Rs.10,000.

Therefore, the interest earned = 10,000 � 1250 = 8750.

8750 = [(1250*n*12.5)/100]

=> n = 700 / 12.5 = 56 years.