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I see 50% + people got it wrong and I guess the only tricky part in this question is the to remember what is asked for

1> Simple Interest Vs Compound interest (there are answers options with compounded interest)
2> What is asked in question (interest or Total amount)

if you are like me and have used S.I = P x R x T formula in school, then it's highly tempting to choose option (b) 10,000∗0.5 --> which is interest only, while the question is asking for Amount in 5 years. so (c) 10,000∗ 1.5

A. 10,000∗0.1^5 --> using CI and Intrest only
B. 10,000∗0.5 --> using SI and Intrest only
C. 10,000∗1.5 --> using SI and Total Amount
D. 10,000∗1.1^5 --> using CI and Total Amount
E. (10,000∗0.1)^5

Ans : C
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Vyshak
Amount = Principal + Interest = 10000 + (10000*5*0.1) = 10000(1 + 0.5) = 10000*1.5

Hey is there any theory related to Simple and compound interest and there differences..
Could Honestly use some..
Thanks
StoneCold
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Hi stonecold,

You can refer to the following post from Bunuel: percentages-interest-and-more-208098.html
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stonecold
Vyshak
Amount = Principal + Interest = 10000 + (10000*5*0.1) = 10000(1 + 0.5) = 10000*1.5

Hey is there any theory related to Simple and compound interest and there differences..
Could Honestly use some..
Thanks
StoneCold

Its simple -

The only difference between Simple and compound interest is " Under simple interest rate of interest , the interest / year will be same for the entire tenure " while " Under Compound Interest Rate system the Interest / year will keep on increasing for the entire tenure "

Illustrating further -

Attachment:
CI VS SI.PNG
CI VS SI.PNG [ 4.68 KiB | Viewed 6465 times ]

Check : The total interest for the entire duration of 5 years is Rs 50 and Interest per month is fixed at Rs 10 Only....


Now with the present problem at hand.!! :-D

Let the principal be $1

So Interest for the $1 for 5 years at 10% Pa is -

\(\frac{1*5*10}{100}\) => 0.50

Now Principal is $1 and Interest is $ 0.50 , so Amount to be rerurned is - $1 + $0.50 => $1.50

So, for $ 10,000 , amount to be returned is 10,000 * 1.50

Answer is (C)
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Abhishek009
stonecold
Vyshak
Amount = Principal + Interest = 10000 + (10000*5*0.1) = 10000(1 + 0.5) = 10000*1.5

Hey is there any theory related to Simple and compound interest and there differences..
Could Honestly use some..
Thanks
StoneCold

Its simple -

The only difference between Simple and compound interest is " Under simple interest rate of interest , the interest / year will be same for the entire tenure " while " Under Compound Interest Rate system the Interest / year will keep on increasing for the entire tenure "

Illustrating further -

Attachment:
CI VS SI.PNG

Check : The total interest for the entire duration of 5 years is Rs 50 and Interest per month is fixed at Rs 10 Only....


Now with the present problem at hand.!! :-D

Let the principal be $1

So Interest for the $1 for 5 years at 10% Pa is -

\(\frac{1*5*10}{100}\) => 0.50

Now Principal is $1 and Interest is $ 0.50 , so Amount to be rerurned is - $1 + $0.50 => $1.50

So, for $ 10,000 , amount to be returned is 10,000 * 1.50

Answer is (C)

Great Work..
Thanks a ton to both of you
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stonecold
Great Work..
Thanks a ton to both of you

The thing to remember for CI problems is actually very simple

Just remember , " CI is Interest on Interest " :-D as below -
Attachment:
CI.PNG
CI.PNG [ 6.38 KiB | Viewed 6332 times ]

Hope this helps !!

PS : Good Username - I am was an avid fan of Stunnerman , Stone Cold - Reminds me of my childhood days !!
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Abhishek009
stonecold
Great Work..
Thanks a ton to both of you

The thing to remember for CI problems is actually very simple

Just remember , " CI is Interest on Interest " :-D as below -
Attachment:
CI.PNG

Hope this helps !!

PS : Good Username - I am was an avid fan of Stunnerman , Stone Cold - Reminds me of my childhood days !!

As He would say => If you think you will nail the GMAT GIVE ME A HELL YEAH...!! **Opens the Clings the CAAANNN **

P.S=> I am glad somebody noticed the username
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