An automobile financier claims to be lending money at simple interest…

Question

An automobile financier claims to be lending money at simple interest, but he includes the interest every six months for calculating the principal. If he is charging an interest of 10%, the effective rate of interest be…

Accepted Answer

Option B. 10.25%. Answer & Solution Answer: Option B Solution: & Let the sum be Rs .100 & Then, & S .I .for first 6 months & = Rs . ( 100 × 10 × 1100 × 2 ) & = Rs . 5 & S .I .for last 6 months & = Rs . ( 105 × 10 × 1100 × 2 ) & = Rs . 5.25 & So, & Amount at the end of 1year & = Rs . ( 100 + 5 + 5…

An automobile financier claims to be lending money at simple interest, but he includes the interest every six months for calculating the principal. If he is charging an interest of 10%, the effective rate of interest becomes

Solution