CAT 1991 — QA Question 1

Simple InterestEasy

Passage / Data

Read the following information and answer the questions that follows:

Ghosh Babu deposited a certain sum of money in a bank in 1986. The bank calculated interest on the principal at 10 percent simple interest, and credited it to the account once a year. After the 1st year, Ghosh Babu withdrew the entire interest and 20% of the initial amount. After the 2nd year, he withdrew the interest and 50% of the remaining amount. After the 3rd year, he withdrew the interest and 50% of the remaining amount. Finally after the 4th year, Ghosh Babu closed the account and collected the entire balance of Rs. 11,000.

The initial amount in rupees, deposited by Ghosh Babu was:

Answer & solution

Correct answer: 50,000

A
25,000
B
75,000
50,000
D
None of these

Solution

Let us assume that Ghosh Babu had deposited Rs.100 initially.

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Hence, had he deposited Rs.100 initially, he should have withdrawn Rs.22 at the end to close the account.

Since he withdrew Rs.11000, at the end, he should have initially deposited = 100/22 × 11,000 = Rs.50,000.

Hence, option (c).

CAT 1991 — QA Question 1

Answer & solution

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