CAT 2020 Question Paper | Quants Slot 3

This Question is from Simple and Compound Interest. Simple Interest and Compound Interest is an important topic for CAT Preparation. Questions from this topic have appeared in every edition of CAT. Make sure you knock off questions from this topic. Worried about where to practice questions? Solve questions from 2IIM CAT Question Bank and get a wonderful CAT score.

Question 20 : A person invested a certain amount of money at 10% annual interest, compounded half-yearly. After one and a half years, the interest and principal together became Rs 18522. The amount, in rupees, that the person had invested is

Video Explanation

Explanatory Answer

A 10% annual interest is a 5% bi-annual interest.
Hence interst for half an year is 5%.

The Principal, P is invested for 1.5 years or 3 terms of half years.
Therefore, P (1 + 5%)³ = 18522
P(1.05)³ = 18522
P × $\frac{21}{20}$ × $\frac{21}{20}$ × $\frac{21}{20}$ = 18522
P × $\frac{7}{20}$ × $\frac{7}{20}$ × $\frac{7}{20}$ = 686
P × $\frac{1}{20}$ × $\frac{1}{20}$ × $\frac{1}{20}$ = 2
P = 2 × 20 × 20 × 20 = 16000.

The answer is, "16000"

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