Question
The interest earned on investing Rs. 1000 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 15% profit, then find the selling price of the article.Solution
Compound interest earned = 1000 × {1 + (20/100)}2 – 1000 = 1440 – 1000 = Rs. 440 So, selling price of the article = 440 × 1.15 = Rs. 506
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