alleryA sum of 10,000 is borrowed at 15% per annum simple interest for 2 years. The amount repayable is:
A13,000
B11,500
C12,250
D13,225
Answer & Solution
Correct answer: A. 13,000
1. Simple interest for one year is 15 per cent of 10000, which is 1500.
2. Under simple interest the yearly amount does not change, so 2 years give 1500 x 2 = 3000.
3. The amount repayable is principal plus interest.
4. That is 10000 + 3000 = 13000.
5. 13225 would be the compound interest answer, which is higher because interest then earns interest.
_Source: syllabus Maths, Ch 7 'Comparing Quantities', S7.4 Compound Interest_
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