The simple interest on a certain sum for 3 years at 12%…

Comprehension:
In the following passage, some words have been deleted. Select the most appropriate option
to fill in each blank.
In the 19th century, there was an industrial revolution in Europe. As a result, millions of people
left the (1) ______ and went to work in big factories in cities. Today, it is the reverse. In several
major cities, people have started moving out. Why? They want a cleaner, (2) ______
environment. There are fewer jobs in ‘heavy’ industries like steel and power generation. (3)
______, there are more jobs in service industries like banking, tourism and food delivery.
Besides, modern transport and communications have made it easier for people to (4) ______
to work or even work from home. The result of this revolution in the 21st century will be
‘spread cities’ – cities are growing fast, but (5) ______, away from city centres and people are
choosing to live 40, 50 or 60 kilometres away.

The simple interest on a certain sum for 3 years at 12% p.a. is Rs 6,750. What is the compound interest (in Rs) on the same sum for 2 years at 20% p.a., if interest is compounded half-yearly? (rounded off to the nearest Rs)

Show answer & explanation

Correct answer: B

Explanation

The correct answer in option 2 i.e. 8,702

Simple Interest = (Principal × time × rate)/100

Rs.6750 = Principal × 3 × 12/100

⇒ Principal = 6750 × 100/ 3 × 12

⇒ Principal = Rs.18750

For Interest compounded half-yearly,

Rate = 20%/2 = 10%

Time = 2 × 2 = 4 half years

Amount = Principal × (1 + rate/100)^time

Amount = 18750 × (1 + 10/100)⁴

⇒ 18750 × (110/100)⁴

⇒ 18750 × 11/10 × 11/10 × 11/10 × 11/10

⇒ Amount = Rs.27451.875 or 27452

Compound Interest = 27452 - 18750 = 8702

SSC CHSL 2021 PYQ — Question 61