CAT 2021 Slot 3 QA Q21 Interest

Question 21 of the Quantitative Ability (QA) section, CAT 2021 Slot 3, with CAT's official answer and a worked solution.

Bank A offers 6% interest rate per annum compounded half yearly. Bank B and Bank C offer simple interest but the annual interest rate offered by Bank C is twice that of Bank B. Raju invests a certain amount in Bank B for a certain period and Rupa invests ₹ 10,000 in Bank C for twice that period. The interest that would accrue to Raju during that period is equal to the interest that would have accrued had he invested the same amount in Bank A for one year. The interest accrued, in INR, to Rupa is
  1. A
    2436
  2. B
    3436
  3. C
    2346
  4. D
    1436

Answer: (A) 2436 Interest MCQ

Solution

  1. Bank A for one year: 3% per half-year, twice: \(1.03^2 - 1 = 6.09\%\).
  2. If Bank B pays \(r\%\) for \(t\) years, Raju's interest equality gives \(rt = 6.09\).
  3. Rupa: rate \(2r\) for \(2t\) years, so total SI rate \(4rt = 24.36\%\).
  4. Interest \(= 24.36\% \times 10000 = 2436\).

Same concept in other years

See every question on Comparing simple and compound interest on the same principal.

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