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      Question

      Rs. 5000 invested for 2 years in a scheme offering

      compound interest (compounded annually) of 15% p.a. gives an interest that is Rs. 25 less than the interest received on investing Rs. Y for a year at simple interest of 25% p.a.. Find the value of ‘Y’.
      A 6250 Correct Answer Incorrect Answer
      B 6350 Correct Answer Incorrect Answer
      C 6550 Correct Answer Incorrect Answer
      D 6850 Correct Answer Incorrect Answer
      E None of these Correct Answer Incorrect Answer

      Solution

      Interest returned on investing Rs. 5000 = 5000(1 + 15/100)2 – 5000 = 5000(115/100)2 – 5000 = 5000(23/20)2 – 5000 = 5000{232/202)- 1} = 5000{529/400)- 1} = 5000(529 - 400)/400 = Rs. 1612.5 So, interest returned on investing Rs. Y for 1 year at simple interest of 25% p.a. = 2580 + 25 = Rs. 1637.5 Or, Y × (25/100) = 1637.5 Or, Y = 1637.5 × (100/25) Or, Y = 6550

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