Session SI & CI

SI & CI – III

If we go through the past years’ CAT papers which are in public domain, it becomes apparent that hardlyany question from SI/CI was asked during the period 2000 to 2008. But due to increased weightage ofarithmetic in the new avatar of CAT, questions from the topic have made appearance in various slots of lastfew years CAT exams after a long hiatus.

Key concepts discussed:

• Simple Interest (S.I.) = P r n

100× ×

• Amount in case of S.I. = nr

P 1100

+

• Amount in case of C.I. (interest being compounded annually) = n

rP 1

100 +

• Amount in case of C.I. (interest being compounded every k months) =

12n

kr12 /k1100

× +

• Present value (P) in case of S.I. = A

nr1

100 +

• Present value (P) in case of C.I. = n

A

r1

100 +

• Installment value = n

P r

100100 1

100 r

×

− +

• Doubling period = 72,

r where r 15%≤ and margin of error is less than 5%.

Highlight: This session deals with questions which are based on elementary concepts of SI/CI. Thissession also has a question on installment.

SessionSI & CI

The questions discussed in the session are given below along with their source.

Q1. Which of the following assures the best return for a sum of Rs.25,000?(I) 2 years at 18% SI(II) 3 years at 10% SI(III) 2 years at 20% CI

(a) I(b) II(c) III(d) Both (I) and (III) are equally good(e) Both (II) and (III) are equally good

(CL material)

Q2. A sum doubles itself in 6 years at a certain rate of interest being compounded annually. In how manyyears will the interest accrued be 15 times of the sum?(a) 20 years (b) 24 years (c) 18 years (d) 30 years

(CL material)

Q3. The amounts on a certain principal for 3 years and for 4 years at a certain rate of CI are Rs.18,250.50and Rs. 20,988.10. What is the rate of interest?(a) 10% (b) 12% (c) 13% (d) 15% (e) 17%

(CL material)

Q4. The value of an estate is estimated to be Rs. 324.48 lakh after 2 years. If the rate of growth of valueis 4% per annum, what is its present value?(a) Rs. 200 lakh (b) Rs. 250 lakh (c) Rs. 300 lakh (d) Rs. 350 lakh (e) None of these

(CL material)

Q5. CI on a sum for 2 years at 4% per annum is Rs. 102. The SI on the same sum for the same periodat the same rate will be(a) Rs. 99 (b) Rs. 101 (c) Rs. 100 (d) Rs. 93 (e) Rs. 95

(CL material)

Q6. Ms. Rao paid equated monthly installments (EMIs) of Rs. 25,000 each January and Februarytowards her home loan, whose outstanding principal amount was Rs. 10,00,000 in December. EachEMI consists of interest on outstanding loan amount for the month and part payment of the loanamount. If interest on the loan is 12% per annum (interest is paid monthly on the demising outstandingloan), the total amount of interest that was paid by Ms. Rao in January and February was(a) Rs. 30,150 (b) Rs. 20,000 (c) Rs. 19,850 (d) Rs. 19,700

(JMET 2007)