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The simple interest for 10 yrs is 6000$ . Compound interest

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The simple interest for 10 yrs is 6000$ . Compound interest  [#permalink]

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New post 25 Nov 2018, 06:32
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A
B
C
D
E

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Question Stats:

70% (02:18) correct 30% (02:55) wrong based on 32 sessions

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The simple interest for 10 yrs is 6000$ . Compound interest for 2 yrs is $1400 . What is the rate percentage and principal.

A. 33.33% , 1600
B. 30%. , 1800
C. 33.33% , 1800
D. 66.66% , 1600
E. 66.66% , 1800

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The simple interest for 10 yrs is 6000$ . Compound interest  [#permalink]

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New post 25 Nov 2018, 08:19
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For questions pertaining to simple interest and compound interest, these are a few concepts that come in handy

1. Simple interest is the exact same amount for all the years.
2. Compound interest = Simple interest(for first year)
3. Compound interest - Simple interest(for the first two years) = Interest on the interest for the 1st year.


Now, coming back to the problem in hand
If SI is 6000$ for 10 years, the simple interest for one year is \(\frac{$6000}{10} = $600\)

Compound interest(2nd year) $600*2 + Interest on $600 = $1400 -> Interest on $600 = $200
We can calculate the rate of interest as \(\frac{200}{600}*100 = 33\frac{1}{3}\)%. Now, as $600 is the interest for
the first year and we have found rate of interest to be \(33\frac{1}{3}\)%, the principal is \(600*3 = $1800\).

Therefore, the interest rate and the prinicpal are \(33\frac{1}{3}%\) and \($1800\)(Option C) respectively
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The simple interest for 10 yrs is 6000$ . Compound interest   [#permalink] 25 Nov 2018, 08:19
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The simple interest for 10 yrs is 6000$ . Compound interest

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