Question
The interest earned on investing Rs. 7000 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 22% profit, then find the selling price of the article.Solution
Compound interest earned = 7000 × {1 + (10/100)}2 – 7000 = 8470– 7000 = Rs. 1470 So, selling price of the article = 1470 × 1.22 = Rs. 1793.4
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