Question

What is the total worth of Lakhiram's assets?
I. A compound interest at 10% on his assets, followed by a tax of 4% on the interest, fetches him Rs.\ 1,500 this year.
II. The interest is compounded once every four months.

• A. The question cannot be answered even with the help of both the statements taken together.
• B. The question can be answered by any one of the statements
• C. Each statement alone is sufficient to answer the question, but not the other one.
• D. Both statements I and II together are needed to answer the question

Hint:

In compound interest problems with taxation, both rate/frequency and net interest amount are required to compute principal.

Answer 1

The Correct Option is D

I: Gives annual return after tax but without compounding frequency, cannot deduce principal.
II: Gives compounding frequency but not the income.
Together: Effective rate can be computed from compounding frequency and tax to back-calculate the principal from Rs.\ 1,500. %Quick tip