In 1978, a kg of paper was sold at Rs25/-. I f the paper rate increases at 1.5% more than inflation rate which is of 6.5% a year , then what wil be the cost of a kg of paper after 2 years? a)29.12 (b) 29.72 (c) 30.12 (d) 32.65 (e) none of these

2 Answers on this Question

1. (a) 29.12 (actual)
   first year rate of paper (inflation rate) : 25 + 25 *
   6.5/100 = 26.625
   paper rate in first year is 1.5 % more . ..thr4
   inflated cost in 1 yr = 26.625 + 1.5 / 100 * 26.625 =
   27.024.
   second year : 27.024 + 27.024 * 6.5 / 100 = 28.78
   paper cost : 1.5 /100 * 28.78 + 28.78 = 29.12 ( approx..)

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2. paper cost increase rate in per year =6.5%+1.5%=8%
   after one year cost will be 25 + 25*(8/100)=25+2=27 Rs
   after second year cost will be 27 + 27*(8/100)=27+2.16=29.16 Rs.
   answer is 29.16 Rs.

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