Question
The interest earned on investing Rs. 1200 for 2 years at
the rate of 10% p.a., compounded annually, is used to purchase an article. If the article is later sold at 30% profit, then find the selling price of the article.Solution
Compound interest earned = 1200 × {1 + (10/100)}2 – 1200 = 1452 – 1200 = Rs. 252 So, selling price of the article = 252 × 1.3 = Rs. 327.6
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