Mathematics for FinanceMTP June 24 Series IIQuestion 1416 of 512
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Mr. X invests 'P' amount at Simple Interest rate 10%\displaystyle 10\% and Mr. Y invests 'Q' amount at Compound Interest rate 5%\displaystyle 5\% compounded annually. At the end of two years both get the same amount of interest, then the relation between two amounts P and Q is given by:

Options

AP=41Q80\displaystyle P = \frac{41Q}{80}
BP=41Q40\displaystyle P = \frac{41Q}{40}
CP=41Q100\displaystyle P = \frac{41Q}{100}
DP=41Q200\displaystyle P = \frac{41Q}{200}
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Correct Answer

✅ Option a — P=41Q80\displaystyle P = \frac{41Q}{80}

All Options:

  • AP=41Q80\displaystyle P = \frac{41Q}{80}
  • BP=41Q40\displaystyle P = \frac{41Q}{40}
  • CP=41Q100\displaystyle P = \frac{41Q}{100}
  • DP=41Q200\displaystyle P = \frac{41Q}{200}

Detailed Solution & Explanation

Let IX\displaystyle I_X be the interest earned by Mr. X on principal P\displaystyle P and IY\displaystyle I_Y be the interest earned by Mr. Y on principal Q\displaystyle Q. Given parameters: * Mr. X: Rate (rX\displaystyle r_X) = 10%\displaystyle 10\% p.a. Simple Interest, Time (tX\displaystyle t_X) = 2\displaystyle 2 years IX=P×10×2100=0.20PI_X = \frac{P \times 10 \times 2}{100} = 0.20 P * Mr. Y: Rate (rY\displaystyle r_Y) = 5%\displaystyle 5\% p.a. Compound Interest, Time (tY\displaystyle t_Y) = 2\displaystyle 2 years IY=Q[(1+0.05)2−1]=Q[(1.05)2−1]=Q[1.1025−1]=0.1025QI_Y = Q \left[ (1 + 0.05)^2 - 1 \right] = Q [ (1.05)^2 - 1 ] = Q [ 1.1025 - 1 ] = 0.1025 Q Since both get the same amount of interest: IX=IYI_X = I_Y 0.20P=0.1025Q0.20 P = 0.1025 Q P=0.10250.20QP = \frac{0.1025}{0.20} Q P=10252000QP = \frac{1025}{2000} Q Dividing both the numerator and the denominator by 25\displaystyle 25: P=4180QP = \frac{41}{80} Q Thus, the relation between the two amounts is P=41Q80\displaystyle P = \frac{41Q}{80}. Hence, **Option A** is the correct answer.

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