Question
The interest earned on investing Rs. 5000 for 2 years at
the rate of 20% p.a., compounded annually, is used to purchase an article. If the article is later sold at 10% profit, then find the selling price of the article.Solution
Compound interest earned = 5000 × {1 + (20/100)}2 – 5000 = 7200 – 5000 = Rs. 2200 So, selling price of the article = 2200 × 1.1 = Rs. 2420
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