Question 27

A certain sum is lent at a certain rate of compound interest. It grows to 1.44 times its value in 2 years. If the same sum is lent at simple interest at the same rate, in how many years would it double itself ?

Let the invested money be "P" at a rate of R % in compound interest :

After two years the value becomes =$$P(1+R/100)^2$$ = 1.44 P
                                   1 + R/100 = 1.2 
                                    R = 20 %.

If same amount of P is invested in simple interest, then value of money after 't' years = $$P\left(1+\frac{\ R\left(t\right)}{100}\right)$$ = 2(P)
                                                                 1 + R(t)/100 = 2 
                                                                  R(t) = 100
Therefore, t = 100/R = 100/20 = 5 years.

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