Question
The interest earned on investing Rs. 4000 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 20% profit, then find the selling price of the article.Solution
Compound interest earned = 4000 × {1 + (10/100)}2 – 4000 = 4840 – 4000 = Rs. 840 So, selling price of the article = 840 × 1.2 = Rs. 1008
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