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      Question

      A sum of Rs. 20000 was invested in a scheme. The rate of

      simple interest offered for three years was 10%, 6% and 4% per annum respectively. After three years, the whole amount was withdrawn and reinvested in a scheme which offered an interest rate of 20% compounded annually for 3 years. What is the total interest earned during the six year period?
      A Rs. 16104 Correct Answer Incorrect Answer
      B Rs. 21472 Correct Answer Incorrect Answer
      C Rs. 16700 Correct Answer Incorrect Answer
      D Rs. 10722 Correct Answer Incorrect Answer
      E None of these Correct Answer Incorrect Answer

      Solution

      ATQ, P = 20000 Simple interest for first 3 years (rates 10%, 6%, 4%): SI1 = 20000 * (10+6+4)/100 SI1 = 20000 * 20/100 SI1 = 4000 Amount after 3 years: A3 = 20000 + 4000 A3 = 24000 Compound interest for next 3 years @ 20% p.a.: A6 = 24000 * (1.20)^3 A6 = 24000 * 1.728 A6 = 41472 Interest for last 3 years: SI2/CI2 = 41472 - 24000 SI2/CI2 = 17472 Total interest in 6 years: Total interest = 4000 + 17472 Total interest = 21472

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