Question
The interest earned on investing Rs. 3000 for 2 years at
the rate of 8% p.a., compounded annually, is used to purchase an article. If the article is later sold at 25% profit, then find the selling price of the article.Solution
Compound interest earned = 3000 × {1 + (8/100)}2 – 3000 = 3499.2 – 3000 = Rs. 499.2 So, selling price of the article = 499.2 × 1.25 = Rs. 624
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