AFCAT Model Paper 1

Given: The difference between compound interest and simple interest on an amount lent for 2 years at the rate of 7% is Rs. 490. Formula Used: Difference between SI and CI for 2 years at rate of interest $r$ is $\frac{Pr^2}{100}$ C I = Amount – Principal $= P \left(1 + \frac{r}{100}\right)^n - P$ $SI = \frac{P \times r \times t}{100}$ , Where P is amount, r is rate of interest and t is time period. Calculation: Let the sum be P The difference between compound interest and simple interest on a sum of money lent for 2 years at 7% is 490. ⇒ CI – SI = 490 ⇒ $P \times \left[\left(1+\frac{7}{100}\right)^2 - 1\right] - \frac{P \times 7 \times 2}{100} = 490$ ⇒ $P \times \left[\frac{49}{100 \times 100}\right] = 490$ ⇒ P = 100000 The interest if that amount is again invested for 1 year under compound interest at the rate of 11 % = Rs. $\left(100000 \times \frac{11}{100}\right) =$ Rs. 11000 ∴ The interest is Rs. 11000